On June 13, new regulations were released from the Federal Government which are intended to expand the use of Healthcare Reimbursement Arrangements (HRAs). HRAs are a type of account-based health plan that employers can use to reimburse employees for their medical care expenses.
Beginning January 1, 2020, employees will be able to use employer-funded Individual Coverage HRAs (ICHRAs) to buy individual-market insurance, including insurance purchased on the public exchanges formed under the Affordable Care Act (ACA). The rule is the result of the October 2017 Executive Order that directed federal agencies to create guidelines that expand access to additional health insurance funding options available to employers and employees.
The ICHRA is an alternative to traditional group health plan coverage, subject to certain conditions. Among other medical care expenses, ICHRAs can be used to reimburse premiums for individual health insurance chosen by the employee. This gives more flexibility to both employees and employers while also maintaining the same tax-favored status for employer contributions towards a traditional group health plan.
The new rule also creates another limited kind of HRA that can be offered in addition to a traditional group health plan. The limited HRA is called “Excepted Benefit HRAs” and permit employers to finance additional medical care (such as employee copays, deductibles, or other expenses not covered by the primary plan) even if the employee declines enrollment in the traditional group health plan.
Details of these new rules may be found on the IRS website FAQs: www.irs.gov/pub/irs-utl/health_reimbursement_arrangements_faqs.pdf
The AIA Trust continues to monitor healthcare insurance reform to identify any potential future healthcare coverage options. At present, there are no healthcare plans with association group pricing that would include the many sole proprietors that are AIA members. Additionally, insurers have been slow to enter the market offering Association Health Plans. Earlier this year, a federal judge struck down the new Association Health Plan rule saying that the administration’s rule was designed to “end run” the ACA. It is unclear how and when the appeal process will resolve itself, but the Court’s ruling was fairly definitive.
Please note that the next open enrollment date for ACA health insurance is November 1 through December 15, 2019. The website for more information and enrollment is www.healthcare.gov.