Expanding Health Coverage Choices: Proposed HRA Regulations

The government has proposed new rules that would expand the ability of employers to offer Health Reimbursement Arrangements (HRAs) to their employees.

Currently, an employer may not offer an HRA unless it is in connection with (“integrated”) an ACA-compliant group health plan. An HRA may not be integrated with individual coverage.  Under the proposed rules, an employer that does not offer group coverage would be permitted to provide an HRA to employees who certify that they have coverage under an ACA-compliant individual health policy.

Currently, employers that do have group coverage may only provide an HRA to employees that elected to be covered under the group plan.  The proposed rule would permit an employer that does have a group health plan to offer an HRA to employees who are not on the group plan provided that the HRA is limited in scope.  This would be mean – among other things – that: only employees eligible for the group plan coverage could have the HRA; the most the employer could contribute to the HRA each year would be $1,800; and the HRA could not be used to purchase individual coverage.

Additionally, the proposed rule clarifies that a large employer that offers an HRA integrated with individual coverage will not be subject to shared-responsibility taxes if the coverage would be considered affordable and providing minimum value.  The proposed rule promises further guidance from the IRS on how that would be determined.

This summary skips over numerous details and the entire proposal is subject to change.  Interested parties have until December 28, 2018, to offer comments.