On June 13, the U.S. Departments of the Treasury, Labor, and Health and Human Services (tri-agencies) issued a final rule allowing employees to use the dollars in employer-funded Health Reimbursement Arrangements (HRAs, also called Health Reimbursement Accounts) to purchase individual coverage both on and off the public Marketplace (or Exchange). The rule also creates a new excepted benefit HRA (EBHRA) to enable employees to be reimbursed for excepted benefit costs. This finalizes a proposed rule issued in Oct. 2018 largely as proposed, but with some modifications. The rule follows through on an Executive Order that directed the tri-agencies to consider ways to expand the flexibility of HRAs.
Individual Coverage HRAs
Beginning Jan. 1, 2020, employers can offer individual coverage HRAs (ICHRAs) to provide tax-exempt dollars to their employees for the purchase of Affordable Care Act (ACA)-compliant individual coverage, but not the less comprehensive, short-term, limited duration insurance (STLDI) coverage. Under the final rule:
Excepted Benefit HRAs
Under the final rule, employers that offer traditional group health coverage can offer EBHRAs of up to $1,800 per year to reimburse employees for certain medical expenses, including stand-alone dental or vision benefits or premiums for STLDI coverage. The maximum amount will be indexed annually after 2020. Employees do not need to be enrolled in a group health plan to use EBHRA funds, and an employer cannot offer both an ICHRA and EBHRA.
The tax treatment of HRAs remains unchanged. The final rule can be read in detail here.
We encourage you to bookmark Cigna's health care reform website, www.InformedonReform.com, where we continuously update information as it becomes available.