If implemented, how will recently proposed regulations for Health Reimbursement Arrangement (HRA) impact the consumer directed healthcare landscape? On October 23, 2018 the Department of Labor, Health and Human Services, and Treasury released two new proposed regulations for HRAs starting January 1, 2020. The proposed regulations would expand the usability of HRAs.
Premium Reimbursement HRAs
The first proposed regulation would allow for a new Premium Reimbursement HRA. This new HRA would allow employers to reimburse employees for the cost of individual health insurance premiums under certain conditions. These conditions are as follows:
- The employer does not offer traditional coverage (i.e. major medical coverage) to the employee or others in the same class of employees.
- The employee and all HRA-covered dependents are actually enrolled in major medical coverage purchased in the individual market and the plan requires substantiation of that fact both initially and when expenses are submitted for reimbursement (employee attestation sufficient).
- The HRA must be offered to all employees within a designated class. Benefits may vary among a class only by age and family size.
- A “QSEHRA”-like notice must be provided 90 days prior to the start of the plan year or prior to the effective date of coverage if the employee becomes eligible after the start of the plan year.
- Employees must be allowed to opt out and waive benefits at least annually.
Excepted Benefit HRAs
The second proposed regulation is the Excepted Benefit HRA. This HRA will reimburse general medical expenses, including COBRA, STLDI, and excepted benefit premiums. The requirements are as follows.
- Maximum annual contribution is $1,800 adjusted for inflation (does not include carry-over amounts which may be unlimited).
- Employee must also be offered traditional health coverage from the same employer but the employee does not have to enroll in that coverage.
- Employee cannot also be offered a Premium Reimbursement HRA.
- The terms and conditions must be the same for all “similarly situated” classes of employees.
Keep Up to Date
In an environment that is constantly changing it is important to stay informed. BPAS can help employers and brokers stay informed of the changes that are affecting CDHP plans. If you have questions or would like to learn more about the services BPAS provides, you can email firstname.lastname@example.org or call 1-866-401-5272.