Proposal Would Allow All Employers to Offer HRAs

A new proposed rule would permit all employers to offer health reimbursement arrangements (HRAs) to reimburse employees’ individual health insurance policy premiums if certain conditions are met. Currently, many employers are prohibited from offering such HRAs. If finalized, the proposal would allow all employers to offer HRAs for plan years beginning on or after January 1, 2020.

In general, the proposal would permit HRAs to reimburse premiums for individual health insurance policies only if:

• All individuals covered by the HRA verified that they are, or will be, enrolled in individual health insurance coverage;
• No class of employees is offered a choice between a traditional group health plan and the HRA;
• The HRA is offered on the same terms to all employees within a class;
• Participants can opt out of the HRA annually; and
• Employers provide eligible participants with a written notice describing certain features of the HRA.

Employers would no longer have to take on the financial and administrative tasks associated with offering health plans, as this new rule would provide a path for small businesses to support the healthcare expenses of their employees.

According to the fact sheet from the Department of Labor, employees could be offered up to $1800 per year to cover “certain qualified medical expenses, including standalone dental benefits and premiums for a short-term health insurance plan.”

Small- and medium-sized companies that currently do not have health insurance benefits for their employees would be impacted the greatest by this change. Comments on the proposal are being accepted until December 28, 2018. GTM will provide updates as they become available.

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