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News Items, by Subject

Health reimbursement accounts (HRAs)

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[Guidance Overview] The New HRA Regs: Individual Coverage HRAs
"The new Individual Coverage HRAs can integrate with: [1] individual insurance coverage purchased on the ACA marketplace; [2] individual insurance coverage purchased outside of the ACA marketplace (including on a private exchange); [3] student health insurance coverage; [4] individual insurance coverage obtained in states that have received a [Section 1332] waiver ... [5] individual catastrophic coverage; [6] 'grandmothered' coverage (i.e., non-grandfathered coverage that is not compliant with ACA but that [HHS] has announced it will not take enforcement action on); and [7] coverage under Medicare Parts A, B, C, or D and Medigap." (Proskauer)
Final Regs Permit Individual Coverage HRAs in 2020
"For the first time, employers will have the realistic opportunity to marry a tax-advantaged, defined contribution approach with an individual coverage market that is available to all employees and dependents regardless of health conditions. The Departments estimate that roughly 800,000 employers will offer ICHRAs to cover roughly 11 million individuals within five years." (ABD Insurance & Financial Services)
[Guidance Overview] Final Rules Issued for Individual Coverage HRAs
"Although the final rule retains seven of the eight classes of employees permitted under the proposed regulations ... it eliminates the class of employees below age 25.... [E]mployers may contribute more for employees based on the number of their dependents or on their age, but ... the maximum differential for contributions between older and younger employees [is limited] to a 3:1 ratio.... [An] ICHRA may integrate with Medicare (either Parts A and B or Part C). It may reimburse premiums for Medicare, including Part D, and for Medicare supplemental coverage." (Ballard Spahr LLP)
[Guidance Overview] Agencies Expand HRA Availability to Provide Coverage
"The final regulations, which will become effective January 1, 2020, provide for two new types of HRAs.... [1] Excepted Benefit HRAs ... There are four requirements that must be satisfied under the regulations for an HRA to qualify as an excepted benefit HRA ... There are no special notice requirements for excepted benefit HRAs, although they will be subject to ERISA's disclosure requirements.... [2] Individually Integrated HRAs ... Current regulatory guidance prohibits employers from offering HRAs that reimburse employees for the cost of individual health coverage ... The regulations ... remove that prohibition if [certain requirements] are satisfied." (The Wagner Law Group)
[Guidance Overview] Final Rules Impose Requirements on Employers Reimbursing for Individual Coverage
"The new rules take effect January 1, 2020. Until then, employers are still prohibited from reimbursing premiums for individual coverage.... The concept of ICHRA is intended to deliver a new avenue for employers to more flexibly fund employee health coverage.... [T]here are many uncertainties about meaningful marketplace coverage opportunities for workers. Moreover, the new guidance imposes key restrictions and limitations[.]" (HUB International)
[Opinion] Trump Administration Gets Smart on Pre-Existing Conditions
"The final rule ... enhances portability by allowing employers to give their workers a (tax-free) contribution to an HRA, so employees can buy the plan that works best for them. If there's any difference between the employer's contribution and the total premium -- for instance, an employer contributes $300 per month, and the worker selects a plan with a $350 monthly premium -- the worker can pay the difference on a pre-tax basis, so long as he purchases the plan outside of the Obamacare exchanges. Best of all, because employees own the plans and not the employer, they can keep their coverage when they change jobs." (The Federalist)
Final Rules Ease Restrictions on Health Reimbursement Arrangements
"The changes aim to ease mostly small and mid-size employers' ability to subsidize health coverage and include guardrails to protect the individual market. For larger employers, the rules create interesting opportunities to subsidize on a tax-favored basis individual health insurance for certain cohorts of employees -- such as part-timers -- who may not currently be eligible for their employer's group health plan." (Mercer)
[Opinion] Trump's Expansion of Health Reimbursement Accounts Improves Health Care Choices
"The new health reimbursement accounts rule has the potential to ... expand employees' choices well beyond the limited options they have today. With this change, the Trump administration expects the individual health insurance market to grow significantly, and become more robust as an arena for health plan participation and competition. This, of course, would partially reverse the disastrous decline in health plan choice and competition that has marked the last six years." (The Heritage Foundation)
Final Rule on Health Reimbursement Arrangements Could Shake Up Markets
"The Trump administration is trying to make this an attractive option to employers, especially small businesses. They expect employers to take them up on this offer, resulting in a significant increase in the size of the individual market.... [D]espite requests for a delay, the rule will go into effect beginning on January 1, 2020.... This post offers background information on HRAs; summarizes the final rule; and briefly discusses the rule's potential implications for employers, employees, and the individual insurance market." (Katie Keith, in Health Affairs)
HHS Final HRA Rule: Similar to the Proposed But Some Notable Changes
"The final rule newly limits the extent to which employers are permitted to vary individual coverage HRA contributions by age.... Two of the changes will make it harder for employers to shift sicker workers into the individual market.... [T]he final rule retains a January 1, 2020 effective date and thus will be relevant for consumers making decisions at the beginning of open enrollment on November 1, 2019.... [T]he attestation process may be quite a bit more porous than other situations that rely on attestation." (The Brookings Institution)
New Final Rule Lets Employees Use HRAs to Buy Health Insurance
"Under the new HRA rule: [1] Employers may either offer an [individual coverage HRA (ICHRA)] or a traditional group health plan but may not offer employees a choice between the two. [2] Employers can create classes of employees around certain employment distinctions ... and then offer an ICHRA on a class by class basis. [3] Employers that offer an ICHRA must do so on the same terms for all employees in a class of employees, but they may increase the ICHRA amount for older workers and for workers with more dependents. [4] Employers can maintain their traditional group health plan for existing enrollees, with new hires offered only an ICHRA." (Society for Human Resource Management [SHRM]; membership may be required to view article)
[Official Guidance] Text of Final Regs: Health Reimbursement Arrangements and Other Account-Based Group Health Plans
497 pages. "The final rules allow integrating HRAs and other account-based group health plans with individual health insurance coverage or Medicare, if certain conditions are satisfied (an individual coverage HRA). The final rules also set forth conditions under which certain HRAs and other account-based group health plans will be recognized as limited excepted benefits. Also, the Department of the Treasury and the [IRS] are finalizing rules regarding premium tax credit (PTC) eligibility for individuals offered an individual coverage HRA. In addition, the [DOL] is finalizing a clarification to provide assurance that the individual health insurance coverage for which premiums are reimbursed by an individual coverage HRA or a qualified small employer health reimbursement arrangement (QSEHRA) does not become part of an ERISA plan, provided certain safe harbor conditions are satisfied. Finally, [HHS] is finalizing provisions to provide a special enrollment period (SEP) in the individual market for individuals who newly gain access to an individual coverage HRA or who are newly provided a QSEHRA." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]; and Internal Revenue Service [IRS])
[Official Guidance] Text of Individual Coverage HRA Model Attestations (PDF)
"[I]ndividual coverage HRAs must implement, and comply with, reasonable procedures to satisfy two substantiation requirements: ... [1] The HRA must substantiate that participants and each dependent covered by the HRA are, or will be, enrolled in individual health insurance coverage or Medicare Part A and B or Medicare Part C for the plan year (or for the portion of the plan year the individual is covered by the HRA, if applicable).... [2] The HRA may not reimburse a medical care expense unless, prior to the reimbursement, the participant substantiates that the individual on whose behalf the reimbursement is requested is (or was) enrolled in individual health insurance coverage or Medicare Part A and B or Medicare Part C for the month during which the medical care expense was incurred.... The Departments have developed the attached model attestations for HRAs that choose to use attestation to satisfy either the annual coverage substantiation requirement or the ongoing substantiation requirement." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]; and Internal Revenue Service [IRS])
[Official Guidance] Text of Individual Coverage HRA Model Notice, with Instructions (PDF)
"An individual coverage HRA must provide a written notice to all employees (including former employees) who are eligible for the individual coverage HRA. The final regulations explain the requirements for the notice. Individual coverage HRAs may use this model notice to satisfy the notice requirement." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]; and Internal Revenue Service [IRS])
[Official Guidance] Text of Agency FAQs: Individual Coverage and Excepted Benefit Health Reimbursement Arrangements (PDF)
18 pages. "[1] What are the benefits of offering an Individual Coverage HRA to employees? ... [2] How does an Individual Coverage HRA work?... [3] Why is the HRA rule important for small businesses and their workers?... [4] What are the expectations for take-up of the Individual Coverage HRA?... [5] I am an employer. To whom can I offer an Individual Coverage HRA? ... [6] How do my employer contributions work? ... [7] Can an employer offer an Individual Coverage HRA to satisfy the employer mandate?... [8] What other responsibilities do I, the employer, have? ... [9] May an employer allow employees to pay any portion of the premium for their individual health insurance that is not covered by the Individual Coverage HRA on a tax-preferred basis by using a salary reduction arrangement under a cafeteria plan? ... [10] Can large employers offer Individual Coverage HRAs too?... [11] What are the benefits of offering an Excepted Benefit... [12] When can employers start offering Individual Coverage HRAs and Excepted Benefit HRAs?" (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]; and Internal Revenue Service [IRS])
[Guidance Overview] HHS, DOL and Treasury Expand Access to Quality, Affordable Health Coverage Through Health Reimbursement Arrangements
"[It] is estimated this expansion of HRAs will benefit approximately 800,000 employers, including small businesses, and more than 11 million employees and family members, including an estimated 800,000 Americans who were previously uninsured.... Under the rule, starting in January 2020, employers will be able to use what are referred to as individual coverage HRAs to provide their workers with tax-preferred funds to pay for the cost of health insurance coverage that workers purchase in the individual market, subject to certain conditions. These conditions strike the right balance between employer flexibility and guardrails meant to protect the individual market against adverse selection, and include a notice requirement to ensure employees understand the benefit. Individual coverage HRAs are designed to give working Americans and their families greater control over their healthcare by providing an additional way for employers to finance health insurance." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]; and Internal Revenue Service [IRS])
[Opinion] ECFC Comment Letter to EEOC on Proposed Overtime Pay Regs under FLSA (PDF)
"ECFC is concerned that amounts allocated by the employer to an employee's account under a health reimbursement arrangement (HRA) may not be exempt from FSLA unlike other health plans arrangements established by an employer and would request clarification under the final regulations that HRAs be treated similar to other employer-provided health benefit plans." (Employers Council on Flexible Compensation [ECFC])
Small Businesses Increased Average QSEHRA Contributions in 2018
"Small businesses increased their offerings through the qualified small employer health reimbursement arrangement (QSEHRA) in 2018 by allocating an average $297 a month to single employees and $445 to employees with a family.... Twenty-six percent of single employees and 10 percent of employees with a family received the federal maximum monthly allowance of $420.83 and $854.16, respectively.... Employees used an average 78 percent of their QSEHRA allowances for the year. One-third used their entire allowance amount." (Wolters Kluwer; free registration required)
Bills Now in House and Senate to Allow Reimbursement for OTC Drug Expenses
"H.R. 1922, the Restoring Access to Medication Act ... would overturn the provision in the [ACA] that prohibited FSAs, HRAs, and HSAs from reimbursing expenses for over-the-counter drugs unless the drug is insulin or prescribed by a physician.... S. 1089, the Restoring Access to Medication Act ... would also overturn the ACA provision that prohibited FSAs, HRAs, and HSAs from reimbursing expenses for over-the-counter drugs." (Employers Council on Flexible Compensation [ECFC])
[Guidance Overview] The Impact of Individual Coverage HRAs on PTC Eligibility and the Employer Shared Responsibility Mandate (PDF)
"[IRS Notice 2018-88] states that anticipated guidance will make it clear that employers offering individual coverage HRAs will be entitled to use the HHI safe harbors ... [which] apply to the required contribution for the plan offered by the employer.... [T]he anticipated guidance will clarify that the plan used to determine each employee's required contribution is the HRA affordability plan or the affordability plan using the safe harbors described in the notice." (Boutwell Fay LLP)
[Guidance Overview] Is the Proposed Expansion of HRAs a Game Changer for Employers? (PDF)
"The proposed regulations may especially be useful for small and medium-sized companies that want to be able to define the costs that they are willing to pay towards employee health insurance coverage by using HRAs with a fixed annual employer contribution and that have a small enough workforce to satisfy some of the consistency requirements of the proposed regulations." (Epstein Becker Green, via Bloomberg Tax Management Compensation Planning Journal)
Recently Proposed Excepted Benefit HRA Rules Offer Limited Relief
"[T]his proposed excepted benefit HRA ... overlaps significantly with existing excepted benefits.... [U]nder current HRA rules, an employer could offer an HRA that covers dental, vision, and long-term care ... without the $1,800 cap, without the requirement to offer a separate group health plan, and without the 'same terms' requirement.... [W]hat are the remaining available benefits? Essentially they are reimbursement of COBRA and short-term limited duration insurance. Neither appears to offer plan sponsors meaningful utility." (HUB International)
[Guidance Overview] Is the Proposed Expansion of Health Reimbursement Arrangements a Game Changer for Employers?
"The proposed regulations may be especially useful for small and medium-sized companies that want to be able to define the costs that they are willing to pay towards employee health insurance coverage by using HRAs with a fixed annual employer contribution and that have a small enough workforce to satisfy some of the consistency requirements of the proposed regulations." (Epstein Becker Green)
[Opinion] American Benefits Council Comment Letter to IRS on Proposed Regs for HRAs and Other Account-Based Group Health Plans
16 pages. "We support the Proposed Rule's goal of expanding the availability of HRAs and permitting their use in combination with policies purchased on the individual insurance market and welcome the increased flexibility it provides for both employees and employers.... In order for the Proposed Rule to achieve its goals, it is vital that the individual market be stable and well-functioning, otherwise, employers will be unwilling to utilize this expanded flexibility." (American Benefits Council)
[Opinion] ECFC Comment Letter to HHS, IRS and DOL on Health Reimbursement Arrangements and Other Account-Based Group Health Plans (PDF)
"We request clarification that substantiation need not occur upon initial ICHRA enrollment; rather substantiation prior to first reimbursement would be adequate.... We would ask that an additional class of employees be considered: exempt and non-exempt employees.... We request confirmation in the final regulations that classes are determined on an employer-by-employer basis not on a controlled group basis." (Employers Council on Flexible Compensation [ECFC])
Five Ways Small Organizations Can Provide Better Health Benefits To Employees
"[1] Offer tax-preferred accounts (FSAs and HSAs).... [2] Offer voluntary products.... [3] Add limited purpose FSAs.... [4] Put a wellness program in place.... [5] Look into QSEHRAs." (Forbes)
[Opinion] Effects of Weakening Safeguards in the Administration's Health Reimbursement Arrangement Proposal
"The proposed rule ... bars employers from offering this type of HRA side-by-side with a traditional health plan; it requires employers to offer this type of HRA on the same terms to all similarly situated employees; and it bars employers from using this type of HRA to subsidize short-term, limited duration coverage.... [A]bsent these safeguards, the Administration's HRA proposal would cause very large increases in individual market premiums, although the precise magnitude of those increases is uncertain." (The Brookings Institution)
Are Medicare Part D Disclosure Notices Required for an HRA or Health FSA?
"The answer is probably yes for the HRA, and no for the health FSA. This assumes that your company's health FSA and HRA will offer prescription drug coverage to Part D-eligible individuals -- i.e., individuals covered under Medicare Part A or Part B, including active and disabled employees, COBRA participants, retirees, and their covered spouses and dependents who live in the service area of a Part D prescription drug plan." (Thomson Reuters / EBIA)
[Opinion] Partnership for Employer-Sponsored Coverage Comment Letter to Agencies on Proposed Rules to Expand HRAs (PDF)
"The Partnership remains concerned about the level of complexity, costs and burdens that may be associated with the verification and notification processes referenced in the proposed rule regarding the offer of an HRA for [individual healthcare coverage] purchase. The current ACA 6055 and 6056 reporting burdens loom large over employers and any additional burdens resulting from a new verification and notification process under the proposed rule may deter employers from offering coverage all together." (Partnership for Employer-Sponsored Coverage [P4ESC])
[Guidance Overview] HRA Expansion: An In-Depth Look at the Proposed Rule
"Without any new guidance or modification, employers that offer different HRA maximums to different classes or raise their HRA contribution due to change in age, under the age-banded premium categories in the individual market, would violate the 105(h) rules. Treasury and IRS anticipate releasing future guidance to address these situations." (Compliance Cornered Blog)
[Guidance Overview] Guidance on Integrating Proposed HRA Rule with Employer Mandate
"[IRS Notice 2018-88] addresses the interaction between the proposed HRA rule and the ACA employer mandate provisions and nondiscrimination rules under the tax code, and proposes changes so these provisions would work with [individual coverage HRAs]. The effective date ... matches the effective date in the proposed HRA rule, which is plan years beginning on or after January 1, 2020. Like the proposed HRA rule, the proposed guidance may not be relied upon by taxpayers and others[.]" (Willis Towers Watson)
[Guidance Overview] Agencies Propose HRA Expansion
"Large employers, as well as employers of any size that deploy group health coverage for recruiting and retention purposes will not likely have much interest. But because individual coverage HRAs are themselves group health plans that provide MEC, they might find purchase in industries with large cohorts of contingent and variable workers -- e.g., restaurants, retail, staffing, and hospitality -- that currently offer so-called preventive-services-only plans." (Mintz)
[Opinion] Evaluating the Administration's Health Reimbursement Arrangement Proposal
"[T]his new option would likely be particularly appealing to large employers with sicker workforces.... [S]ubsidizing community-rated individual market coverage could allow them to offer similar coverage at lower cost.... [T]he influx of sicker workers into the individual market would increase premiums, thereby increasing subsidy costs for the federal government and premiums for unsubsidized enrollees." (The Brookings Institution)
[Guidance Overview] Departments Propose Expanding Employers' HRA Options
"To facilitate access to individual coverage HRAs, employees and their dependents would have new marketplace special enrollment opportunities ... where an employer begins offering an individual coverage HRA mid-year, as well as where an employee becomes eligible for an individual coverage HRA mid-year. An individual would have 60 days before and after becoming enrolled in an individual coverage HRA or QSEHRA in which to enroll in marketplace coverage." (Buck)
Proposed Rules Would Expand Access to HRAs (PDF)
"[T]he plan sponsor could offer a group health plan to one group of participants and an Individual Coverage HRA to other groups.... Individual Coverage HRAs would have to be offered to all participants within a designated class on the same terms. However, the amount a plan sponsor contributes to an Individual Coverage HRA could vary based on age, family size or both." (Segal Consulting)
[Guidance Overview] IRS Begins Discussing HRAs, the ACA Employer Mandate, and Nondiscrimination
"The new proposed rules allowing employers to reimburse for individual insurance policies ... included some options that could, or would, violate existing nondiscrimination rules that apply to [HRAs] and other self-insured health plans. The IRS is now starting to address those concerns with the release of Notice 2018‑88.... [T]he Notice is just an expression of where the IRS expects to go. While it is a helpful breadcrumb in that process, employers cannot start implementing this now." (HUB International)
[Guidance Overview] New IRS and Treasury Guidance on Safe Harbors for HRAs
"As proposed, the new rule would allow HRAs to be used to fund premiums and out-of-pocket costs for individual health insurance coverage for plans beginning on or after January 1, 2020. Notice 2018‑88 is complex but designed to make it easier for employers to offer an individual HRA under the proposed HRA rule ... Notice 2018‑88 -- and the positions taken by the IRS and Treasury Department in the guidance -- could have significant consequences for whether employers opt to move forward with offering individual HRAs to employees." (Katie Keith, in Health Affairs)
[Opinion] The Tortuous History of HRAs: What Does the Future Hold?
"Which employers would go in this direction, under what circumstances, and for which employees? Would it vary by firm size? Do the strength of the economy and labor market conditions factor in? ... Employers may decide that they no longer need to offer health benefits to be competitive in the labor market during the next recession, and the combination of the insurance market reforms and the ability to give workers tax-free money to purchase health insurance on their own may finally put the future of employment-based health coverage to the test." (Paul Fronstin, EBRI [Employee Benefits Research Institute])
[Guidance Overview] IRS Requests Comments on Application of Employer Shared Responsibility and Nondiscrimination Requirements to Individual Coverage HRAs
"The [IRS] recently released proposed regulations regarding the ability to integrate health reimbursement arrangements and other account-based group health plans (HRAs) with individual health insurance coverage. IRS Notice 2018‑88 sets forth anticipated guidance and requests comments on the application of the employer shared responsibility requirements in Internal Revenue Code Section 4980H and the nondiscrimination requirements of Code Section 105(h) to such HRAs. The Notice states that it cannot be relied upon by taxpayers with regard to Code Sections 4980H or 105(h), but gives an indication as to the IRS guidance that can be expected on these topics." (Winston & Strawn LLP)
Employer Options for Health Insurance May Expand with New HRA Rules
"The departments estimate that 1 million employees will enroll in individual coverage with access to an [individual coverage HRA (ICHRA)] in 2020, with that number growing to 10.3 million by 2024. About two thirds of that group are estimated to come from traditional employer-sponsored group health coverage. The departments predict 800,000 companies will offer ICHRAs in 2024, while suggesting the vast majority of adopters will be small to midsize employers." (Willis Towers Watson)
New Proposed Regs Would Expand HRAs (PDF)
"These proposed rules will allow employers to offer HRAs that integrate with individual health insurance coverage. Any employer (not just small employers) can offer an HRA that integrates with an employee's or family member's individual insurance coverage. The insurance coverage could be purchased on or off the Marketplace. To receive a reimbursement from the HRA for health expenses or premiums, employees must verify they and any eligible family members have individual coverage." (Marsh & McLennan Agency LLC)
[Guidance Overview] Proposed Rule Expands HRA Usage and Forecasts Safe Harbors for ACA Employer Mandate Compliance
"By moving to a 'defined contribution' model, employers would be able to cap their annual health care spending and shift the risk to insurance companies. However, unless employers provide substantial HRA contributions, employees would bear the brunt of cost increases imposed by insurers in the individual market. Further, without the combined risk pool that comes with a group health plan, employees may find it difficult to replicate their current coverage without increasing their out-of-pocket expenditures." (Littler)
[Official Guidance] Text of IRS Notice 2018-88: Section 4980H -- Shared Responsibility for Employers Regarding Health Coverage, and Section 105 -- Amounts Received Under Accident and Health Plans (PDF)
31 pages. "[Recent] proposed regulations would expand the usability of HRAs by eliminating the current prohibition on integrating HRAs with individual health insurance coverage, thereby permitting employers to offer HRAs to employees enrolled in individual health insurance coverage.... The proposed integration regulations and the proposed [premium tax credit (PTC)] regulations raise issues under the Code, in particular concerning the application of section 4980H (the employer shared responsibility provisions) and section 105(h) (addressing discriminatory self-insured group health plans). This notice is intended to initiate and inform the process of developing guidance that addresses these issues, and requests comments on potential approaches developed by the Treasury Department and the IRS....

"In order to provide clarity to stakeholders, section III.A of this notice explains how section 4980H(a) would apply to an ALE that offers an individual coverage HRA. In addition, section III.B of this notice explains how section 4980H(b) (including the current affordability safe harbors) would apply to an ALE that offers an individual coverage HRA, describes potential additional affordability safe harbors, requests comments, and provides examples." (Internal Revenue Service [IRS])

IRS Updates Health and Fringe Benefit Plan Limits
"The IRS has updated various health and fringe benefit plan limits for 2019. A comparison of the 2019 and 2018 limits is listed [in a chart]." (Kilpatrick Townsend)
IRS Announces Benefit Plan Limits for 2019 (PDF)
2-page printable chart shows limits for 2018 and 2019, as well as important deadlines for 2019. (Lockton)
[Guidance Overview] Proposed Regs for Health Reimbursement Arrangements
"The Departments issued proposed regulations that allow for stand-alone, excepted benefit HRAs [EBHRAs].... The EBHRA is not subject to the Market Reform Rules, and coverage under the EBHRA does not make an individual ineligible for the PTC. There are four requirements for the EBHRA.... Prior to the passage of the ACA, many employers offered HRAs to employees. Due to the limitations in the ACA, these plans became scarce ... Employers will likely welcome having the opportunity to offer employees an EBHRA." (Trucker Huss)
[Guidance Overview] Proposed Regs Would Permit Employers to Reimburse Employee Premiums for Health Insurance Purchased in the Individual Market
"If these regulations ... are finalized in their current form, employers may choose to eliminate their group health plan coverage and establish an HRA that reimburses the cost of individual health coverage purchased by employees, if certain conditions are met. The proposed regulations even suggest that the regulators may create special rules that would treat an employer sponsoring one of these HRAs as fully satisfying the [ACA's] employer mandate ... This could potentially lead to a shift from traditional group health plans to a 401(k)-like defined contribution approach towards employer-provided health coverage, likely to be most popular with smaller employers." (Foley & Lardner LLP)
Don't Forget to Set Your HRA COBRA Premiums!
"[U]sing a look back to the previous 12-month plan year period and calculating a cost per participant to determine the actual cost is the most common method ... Be prepared to then determine single versus family COBRA HRA rates and how to properly apply those to qualified beneficiaries." (Frenkel Benefits)
[Guidance Overview] Expanded Usability of HRAs Under the Proposed Rule
"Integrated HRAs may be particularly attractive to small employers who are not required to offer coverage under the employer mandate but who wish to provide workers with health care coverage as a means of attracting talent and retaining employees.... Under the Proposed Rule, an employer would not be permitted to offer both an Integrated HRA and an Excepted Benefit HRA to the same employee, but an employer could offer one of these HRA arrangements to one class of employees and the other HRA arrangement to a different class of employees." (Drinker Biddle)
[Guidance Overview] Key Changes under the Proposed Rule for Health Reimbursement Arrangements
"[1] Remove the current prohibition on integrating an HRA with individual health insurance coverage. [2] Expand the definition of 'limited excepted benefits' to include HRAs that meet certain requirements.... [3] Clarify that integration of an HRA or a QSEHRA with individual health insurance coverage does not cause the individual health insurance coverage to become subject to ... [ERISA] if certain requirements are met. [4] Create a special enrollment period in the individual health insurance market that enables individuals to enroll when they become eligible for HRA or QSEHRA coverage that can be integrated with individual health insurance coverage." (Ogletree Deakins)
[Guidance Overview] Agencies Respond to Trump Order, Issue Proposed Regs Paving Way for More HRAs
"The proposed 'Integrated HRA' rules would permit employers of any size to offer a standalone HRA to employees and former employees who have individual health coverage.... As an alternative to the Integrated HRA option, the Proposed Rule would recognize certain HRAs as limited excepted benefits (Excepted Benefit HRA). An Excepted Benefit HRA would allow participants to obtain reimbursement for certain qualified expenses even if they choose not to enroll in an employer's group health plan coverage." (McDermott Will & Emery)
[Guidance Overview] IRS Proposed Regs Would Reinvigorate HRAs, But Add Complexity
"[Future IRS] guidance is expected to create a safe harbor allowing the employer to satisfy the minimum value requirement if the employee's individual health insurance policy meets 'minimum value' (at least 60 percent actuarial value) and if, taking into account the employer's subsidy through the HRA, the premium cost to the employee is affordable.... [An] employer would be allowed to offer group major medical coverage to full-time employees but only an HRA to part-time employees, or offer group major medical coverage to employees in one state but only an HRA to employees in another state." (Lockton)
[Guidance Overview] Proposed Rules Would Permit HRAs to Be Integrated with Individual Health Insurance Coverage
"The proposed regulations would permit HRAs to be integrated with individual health insurance coverage if the following six conditions are met. [1] All individuals covered by an HRA must be enrolled in individual coverage... [2] Restriction involving the same class of employees... [3] Same-terms requirement... [4] Opt-out provision... [5] Substantiating individual health insurance coverage... [6] Notice requirement." (Thomson Reuters Practical Law)
[Guidance Overview] New Day for HRAs: The Ins and Outs of the New Proposed Regulation (PDF)
13 pages, Nov. 1, 2018. "This proposed regulation, which will be effective for plan years beginning on or after January 1, 2020 (and cannot be relied on before the effective date), makes drastic changes to the rules currently applicable to HRAs offered to active employees." (Alston & Bird)
[Guidance Overview] An Employer's Guide to Proposed Regulations Expanding HRAs
"[S]tarting in 2020: [1] employers of any size not offering health coverage to all or certain employee classes could use HRAs to reimburse those employees for the cost of individual health insurance coverage (IHIC), subject to certain conditions; and [2] employers offering traditional group coverage could provide an HRA up to $1,800 annually (indexed) to reimburse employees for certain qualified medical expenses." (Davis Wright Tremaine LLP)
[Guidance Overview] Proposed Rules Allow the Use of HRAs to Pay For Individual Market Coverage
"[T]he Departments have proposed a fairly significant substantiation of coverage requirement on employers sponsoring the [Individual Coverage HRAs (ICHRA)].... [T]he Proposed Regulations do not permit employers to distinguish between salaried and hourly employees.... [T]he Proposed Regulations would require that former employees be treated as being in the same class to which they belonged immediately prior to their separation from service.... [T]he current rules that permit retiree-only HRAs are still in effect[.]" (Groom Law Group)
[Guidance Overview] Proposed U-Turn on Employers Paying for Individual Policies Leaves Questions Unanswered
"[E]mployers should bear in mind that the existing rules (which impose substantial penalties for reimbursing for individual health insurance premiums) still apply.... The rules allow employers to offer the HRA only to specific classes of employees (or a combination of classes) ... Notably absent from the list is salaried versus hourly.... [T]he Departments did remove a key hurdle. The proposed new rules would not make the individual insurance policies part of the ERISA plan." (HUB International)
[Guidance Overview] Trump Administration Moves to Incentivize Health Reimbursement Arrangements
"This post offers background information on HRAs; summarizes the proposed rule; and discusses the rule's potential implications for employers, employees, and the individual insurance market. Comments on the proposal are due within 60 days." (Katie Keith, in Health Affairs)
Choosing the Right Flexible Benefit for Employees
"Trying to decide which of the many employer-sponsored benefits out there to offer employees can leave an employer feeling lost in a confusing bowl of alphabet soup -- HSA? FSA? DCAP? HRA? ... While there are many details to cover for each of these benefit options, perhaps the first and most important question to answer is: which of these benefits is going to best suit the needs of both my business and my employees?" (United Benefit Advisors)
[Guidance Overview] A New Direction for Health Reimbursement Arrangements
"Under the proposed rules, differences in the amount of HRA contributions can be based on an employee's work location. However, availability of individual Exchange coverage is based on an individual's place of residence. Employees at the same work location could live in multiple rating areas. Therefore, the employer's HRA contribution would buy varying amounts of coverage for its employees, even if the employer makes adjustments for age and family size, because of differences in individual insurance coverage options and costs." (Winston & Strawn LLP)
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