The Washington Report
June 19, 2019
Departments Release Final Regulations on HRAs and Other Account-Based Group Health Plans
On June 13, 2019, the Departments of Treasury, Labor, and Health and Human Services (the Departments) released final regulations on Health Reimbursement Arrangements (HRAs) and other account-based group health plans. The final regulations 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 regulations also set forth conditions under which certain HRAs and other account-based group health plans will be recognized as limited excepted benefits.
According to the news release, “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. . . . In addition to allowing individual coverage HRAs, the HRA rule creates an excepted benefit HRA. In general, this aspect of the rule permits employers that offer traditional group health plans to provide an excepted benefit HRA of up to $1,800 per year (indexed to inflation after 2020), even if the employee doesn’t enroll in the traditional group health plan, and to reimburse an employee for certain qualified medical expenses, including premiums for vision, dental, and short-term, limited-duration insurance.”
Additionally, the Treasury Department and the Internal Revenue Service are finalizing rules regarding premium tax credit eligibility for individuals offered an individual coverage HRA. The Department of Labor is also 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, the Department of Health and Human Services is finalizing provisions to provide a special enrollment period in the individual market for individuals who newly gain access to an individual coverage HRA or who are newly provided a QSEHRA. The final regulations affect employees and their family members; employers, employee organizations, and other plan sponsors; group health plans; health insurance issuers; and purchasers of individual health insurance coverage.
The final regulations are effective August 19, 2019. For specific applicability dates, please refer to the final regulations.
The final regulations are temporarily available here.
(The final regulations will be published in the June 20, 2019, Federal Register.)
The news release is available here.
A “Frequently Asked Questions About New Health Coverage Options for Employers and Employees” document is available here.
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