Health Reform WK-EDGE Individual health reimbursement option coming in 2020
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Tuesday, July 2, 2019

Individual health reimbursement option coming in 2020

By Cathleen Calhoun, J.D.

Employers will be allowed to give a new HRA option beginning in January 2020, but what does it mean?

Health reimbursement arrangements (HRA) will be expanded beginning in 2020 under a new rule finalized by the U.S. Departments of Health and Human Services, Labor, and the Treasury, that allows employers to give a new HRA option as an alternative to health care coverage. Employees must be enrolled in health insurance, and employers will be able to use individual coverage HRAs to provide their workers with tax-preferred funds to pay for the cost of health insurance coverage that workers purchase in the individual market. The new rule also creates another limited kind of HRA that can be offered in addition to a traditional group health plan—excepted benefit HRAs. The excepted benefit HRAs allow employers to finance additional medical care, such as help covering the cost of copays not covered in the primary plan, even if the employee declines enrollment in the traditional group health plan (Final rule, 84 FR 28888, June 20, 2019).

HRAs. An HRA is a type of account-based group health plan funded solely by employer contributions, with no salary reduction contributions or other contributions by employees, that reimburses an employee solely for medical care expenses incurred. An individual coverage HRA reimburses employees for their medical care expenses, up to a maximum dollar amount that the employer makes available each year. The employer can permit unused amounts to roll over from year to year (see New rules expanding use of health reimbursement arrangements proposed, October 29, 2018).

Employer mandate. An offer of an Individual Coverage HRA will count as an offer of coverage under the employer mandate. If an applicable large employer wants to avoid an employer mandate payment by offering an Individual Coverage HRA, in general, that employer will need to contribute a sufficient amount for the offer of the Individual Coverage HRA to be considered affordable. The Internal Revenue Service will provide more information on how the employer mandate applies to Individual Coverage HRAs in the near future.

FederalRegisterIssuances: FinalRules AccessNews EmployerMandateNews EnrollmentNews GeneralNews HealthInsuranceExchangeNews IndividualMandateNews LargeEmployerNews NewsFeed

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