In an effort to increase employer flexibility and a worker’s choice of health coverage, new regulations (“Rule”) were released that expand the reach of Health Reimbursement Arrangements (HRAs). The Rule added two new types of HRAs to the types of HRAs an employer can sponsor. The two new HRAs are:
Individual Coverage HRAs (ICHRA). Under the Rule, the highlights of these HRAs are:
- Available to employers of any size for employees who are not offered a group health plan.
- No cap on contribution amounts.
- Funds can be used by employees to purchase individual health care coverage, such as plans offered through public exchanges under the Affordable Care Act (ACA).
- Employers can create select classes of employees, such as part-time, full-time, salaried or hourly to offer individual insurance while offering a group health plan to other classes of employees.
Excepted-Benefit HRA. Under the Rule, the highlights of these HRAs are:
- Available regardless of whether or not an employee is enrolled in their employer’s group health plan.
- Employers with a traditional group health plan can provide up to $1,800 a year to help employees pay for certain qualified medical expenses.
Although the regulations are not effective until January 1, 2020, the rules will affect employees and employers as early as the beginning of open enrollment this coming fall. The Department of Labor has issued a model notice to help employers educate their employees on the new ICHRA.
If you have questions or want further detail about these new HRAs, please contact your Nyhart consultant.