HHS, with the Departments of Labor and Treasury, has issued a new rule to expand the use of health reimbursement coverage, which provide tax-preferred funds for employees to buy their own insurance on the individual market.
The agency estimates that, once fully expanded, health reimbursement arrangements (HRAs) will be available to approximately 800,000 employers and more than 11 million employees and family members, including 800,000 Americans who weren’t insured before.
Beginning in January 2020, small employers can use individual coverage HRAs to give certain employees tax-preferred funds to buy health insurance on the individual market. HHS touts the move as providing more flexibility to employers while keeping guardrails in place to prevent adverse selection in the individual market.
“Individual coverage HRAs are designed to give working Americans and their families greater control over their healthcare by providing an additional way for employers to finance health insurance,” the announcement from HHS reads.
“HRAs create a great opportunity for job creators to support their employees and for those employees to be empowered to make the best healthcare decisions for their families,” Labor Secretary Alex Acosta said in a statement.
Employers that already offer traditional health insurance coverage can also offer an excepted benefit HRA––up to $1,800 per year. This can be done even if the employee isn’t enrolled in the traditional group health plan and can be used to reimburse the employee for qualified medical expenses, like premiums for vision, dental and short-term, limited-duration insurance.
“The policy creates an exciting new opportunity for employers—especially small employers that might not offer coverage today—to provide employees tax-preferred funds to help buy coverage on the individual health insurance market,” CMS Administrator Seema Verma said in a statement. “Making this option available to employers will significantly increase coverage across America and reduce the number of uninsured.”
The Trump administration expanded short-term health plans, which are considered controversial by some as they do not provide comprehensive care or follow Obamacare requirements, last year. In fact, one Florida company was recently sued over its “skimpy” plans allowed by the Trump administration, The New York Times reported.
The regulation follows up on President Trump’s executive order “Promoting Healthcare Choice and Competition Across the United States,” according to HHS.
See the final rule here.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."