Final Rule Expands Options for HRAs

Final Rule Expands Options for HRAs

On June 13, 2019, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued a final rule that expands the usability of health reimbursement arrangements (HRAs). Effective in 2020, the final rule establishes two new types of HRAs:

Individual Coverage HRA: Allows employers to offer an HRA to be used to reimburse the cost of individual market premiums on a tax-preferred basis, subject to certain conditions, as an alternative to traditional group health plan coverage.

Excepted Benefits HRA: Allows employers that offer traditional group coverage to provide an HRA of up to $1,800 per year (as adjusted) to reimburse certain qualified medical expenses.

This final rule was issued in response to a 2017 executive order directing federal agencies to expand access to HRAs. The rule is effective for plan years beginning on and after Jan. 1, 2020. Employers can consider whether they could make use of either of these HRA options for employees.

To read an in-depth summary of the final rule–including its implications for Employer Shared Responsibility (“Pay-or-Play” or “Employer Mandate”) compliance—please click here.

There are still many outstanding details that need to be addressed by federal regulators (including affordability safe harbors for Employer Shared Responsibility compliance).  As such, Kistler Tiffany Benefits will continue to monitor the implementation of these regulations, and keep you informed of any developments.