Final Rule Issued Allowing HRAs to be used for Individual Coverage
During the month of June 2019, the tri-agencies issued a final rule that would allow employees to use money from their employer-funded Health Reimbursement Arrangements (HRAs) to buy individual coverage through or off the Marketplace. Additional changes for the HRA will be made through a new excepted benefit that will enable employees to be reimbursed for the excepted benefit costs. Key changes are listed below:
Individual Coverage HRAs
- Employees will be able to use the funds from the ICHRA (Individual Coverage HRA) to pay for the premium of their individual insurance coverage purchased on or off the Marketplace.
- The employers are able to offer employees a group health plan or an ICHRA, but they cannot offer both.
- Employers are required to make the ICHRA available to all employees, including part-time or seasonal workers.
- Employers must provide a written notice to employees at least 90 days prior to the start of the plan year that details the terms of the ICHRA. The tri-agencies will provide a model notice.
- The total funds offered through an ICHRA may vary in two instances: as the age of the participant increases (not to exceed a 3:1 age band), and based on the number of dependents covered.
Excepted Benefit HRAs
Under the final rule, employers that offer traditional group health coverage can offer EBHRAs (excepted benefit HRA) 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 (short-term, limited duration insurance) 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.