Learn how the new HRA final rule offers employers and employees new opportunities.

On June 13, 2019, the Department of Labor, the Department of Health and Human Services, and the Treasury Department issued a rule that expands the use of HRAs (health reimbursement arrangements) in the workplace.  The rule creates two new types of HRAs (individual coverage HRAs and excepted benefits HRAs) to expand employee access to employer-offered health coverage benefits. The rule will go into effect for plan years beginning on and after January 1, 2020.  Here is a breakdown of how the new HRA final rule offers employers and employees new opportunities.

  • Individual Coverage HRAs

Individual coverage HRAs allow employers to offer their staff an alternative to traditional health plan coverage.  These HRAs can be combined with an employee’s individual insurance and can be used to reimburse employees for their individual health coverage on a tax-preferred basis.  Essentially, individual coverage HRAs allow employees to choose their own health insurance plan and be reimbursed for their premiums by their employer.

  • Excepted Benefit HRAs

Excepted benefit HRAs allow employers who are offering their staff traditional employer-sponsored health coverage to also offer employees an HRA to reimburse them for certain medical expenses. For instance, an excepted benefit HRA can be used to pay for premiums related to individual or group plan health coverage that consists only of excepted benefits (stand-alone vision, dental, accident, workers compensation, or disability insurance).  This HRA can also be used to cover the premiums related to short-term, limited-duration insurance plans and COBRA coverage. Please note that an excepted benefits HRA cannot be used to reimburse employees for standard individual health coverage, standard group health plan coverage (other than COBRA or group continuation coverage), or Medicare Parts B or D.  Employees can offer an excepted benefit HRA up to $1,800 a year.

This is how the HRA final rule offers employers and employees new opportunities for health care coverage. Do you want to stay up-to-date on all the latest employee benefits news?  If so, then contact the experts at CIA Insurance and Risk Management for assistance today.

Post written by Janelle Morck, Vice President | Employee Benefits Risk Management (ERM)

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