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Friday, 12 July 2019 11:29

The Expanded HRA Rules

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In June, the Trump Administration issued new rules expanding the function of Health Reimbursement Arrangements (HRA) in an attempt to provide employers additional options for providing health coverage.  These rules, which will go into effect in January 2020, create two new ways to offer pre-tax dollars for purchasing health coverage: the Individual Coverage HRA (ICHRA) and the Excepted Benefit HRA (EBHRA).

What is an ICHRA?

  • Employers of all sizes can fund ICHRAs with unlimited pretax dollars for employees to purchase their own individual health insurance coverage.

  • Employees will be able to use these funds to obtain individual coverage for themselves and their dependents when purchased on or off the ACA exchanges or when enrolling in Medicare (Think HR).


Who can participate in an ICHRA?

  • Employees who are not offered a traditional group health plan can be offered an ICHRA (SHRM).

  • The new rules outline specific classes and class sizes which employers can use to offer ICHRAs, while still offering other classes a traditional group health plan, unlike the existing Qualified Small Employer HRA (QSEHRA) (People Keep).

  • ICHRA participants who purchase insurance coverage on the exchange will not be eligible for any premium tax credit or subsidy (SHRM).


How do ICHRAs impact ACA and ERISA?

  • Offering an ICHRA will count as an offer of coverage under the employer mandate for applicable large employers (ALEs) but are still subject to ACA affordability rules.

  • Insurance coverage purchased with an ICHRA will not be subject to ERISA (HHS).

  • The rules also now allow employer cafeteria plans (Section 125 plans) to be used to deduct pretax income from an employee’s paycheck to purchase off-Exchange individual insurance plans (Think HR).


What is an EBHRA?

  • An EBHRA can be used to reimburse the costs of certain medical expenses, similar to an employer contributing to a Flexible Spending Account.

  • Employees can receive up to $1,800 per year pretax to purchase vision and dental coverage, COBRA continuation coverages, or some short-term insurance plans (Think HR).


Who can participate in an EBHRA?

  • Employees offered an EBHRA must also be offered a traditional medical insurance plan, though enrollment in the traditional insurance plan is not required.

  • EBHRAs cannot be offered in conjunction with an ICHRA (Think HR).


Traditional HRAs and QSEHRAs will continue to exist without any changes, and traditional group health insurance plans have not been modified. Though these rules were announced in June, additional guidance will be provided before the plans are offered in 2020. Be sure to stay tuned to our blog for updates as we learn more!


To read more about these changes, see the links below, and if you have questions about ICHRAs or EBHRAs, please reach out to your Fall River Account Manager!


Additional Resources:

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/new-final-rule-lets-employees-use-hras-to-buy-health-insurance.aspx

https://www.healthaffairs.org/do/10.1377/hblog20190614.388950/full/

https://www.plansponsor.com/hra-regulations-expected-significant-small-business-impact/

Read 198 times Last modified on Wednesday, 31 July 2019 12:10