Federal Government Releases Proposed Regulations that will Expand the use of HRAs
Tuesday, October 23, 2018
Posted by: William Sweetnam and John Hickman
Today the Department of Labor (DOL), Treasury Department and Department of Health and Human Services (HHS) released proposed regulations which will expand the use of health reimbursement arrangements (HRAs) by employers. Here is a link to the DOL Press Release.
After enactment of the Affordable Care Act (the “ACA”), limits were placed on the use of HRAs by employers due to the ACA’s prohibition of annual and lifetime limits on benefits and the requirement of cost-free preventive services. HRAs that were integrated with the employer’s group health coverage were permitted under the regulations; however, HRAs could not be integrated with individual health insurance coverage. Also exempt from the ACA’s requirements for health insurance were retiree only plans and excepted benefits; however, although flexible spending arrangements were considered excepted benefits, HRAs were not.
As a result of the Trump Administration Executive Order 13813 entitled “Promoting Healthcare Choice and Competition Across the United States,” the DOL, Treasury and HHS have reviewed the previous requirements regarding HRAs and have issued these proposed regulations which will provide additional opportunities for employers to offer HRAs to their employees. The proposed rules would generally retain the current types of permitted HRAs (integrated HRAs, HRAs restricted to excepted benefits, and retiree only HRAs) and also allow two new types of HRAs:
- An individual health insurance premium reimbursement HRA (provided that certain requirements related to nondiscrimination, notice, no other group health plan coverage, etc) are satisfied.
- An excepted benefit HRA that generally allows up to $1800 per year (plus carryover amounts) in reimbursement for medical expenses (OTHER than health insurance premiums) provided that employees are offered coverage under another group health plan sponsored by the employer.
The guidance also provides rules on how the ACA’s premium tax credit interact with HRAs.
The Departments state that the finalized regulations will not be effective until plan years beginning on or after January 1, 2020, and that taxpayers cannot rely on the proposed regulations prior to their finalization.
The Departments request comments on these proposed regulations, and, after through review of these proposals, ECFC will draft appropriate comments reflecting the members’ concerns. A more detailed explanation of these proposals will be included in the next issues of the FlexReporter.