Industry News

On June 13, 2019, the U.S. Departments of Health and Human Services, Labor and Treasury (collectively “The Departments”) issued final regulations expanding the use of Health Reimbursement Arrangements (HRAs) by employers and other plan sponsors, if certain requirements are met. HRAs are a type of account-based health plan that employers can use to reimburse employees for their medical care expenses. Effective January 1, 2020, the new rule creates two new types of HRAs: 1) Individual Coverage HRA (ICHRA); and 2) Excepted Benefit HRA (EBHRA).

For an ICHRA, employers and other plan sponsors may provide employees with tax-preferred funds to pay for health insurance coverage purchased in the individual market, subject to certain conditions. Under the new regulations, an HRA is permitted to be integrated with certain qualifying individual health plan coverage in order to satisfy the market reforms.

For an EBHRA, employers and other plan sponsors that offer traditional group health plans may provide a stand-alone HRA of up to $1,800 per year, indexed to inflation after 2020. Employers may also reimburse employees for certain qualified medical expenses, such as premiums for vision, dental, and short-term, limited duration insurance.

The Departments estimate that the expansion of HRAs will benefit about 800,000 employers and over 11 million employees and family members, including an estimated 800,000 individuals who were previously uninsured.

The final regulations are available here.

Further information is available in the FAQs on New Health Coverage Options for Employers and Employees here.