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Final Rule Expands HRA Options

HRA options

2 minute read

On June 13, 2019, the Departments of Labor, Health and Human Services, and the Treasury Department issued a final rule that expands the use of health reimbursement arrangements (HRAs) effective in 2020.

The final rule establishes two new types of HRAs:

Individual Coverage HRA: This ruling allows employers to offer an HRA in lieu of a group health plan, subject to certain conditions. The HRA can be used to reimburse the cost of health insurance premiums in the individual marketplace, if the following conditions are met:

  • The participant and dependents must be enrolled in the individual health insurance coverage each month that they are covered by the HRA
  • The employer cannot offer a traditional group health plan to the same class of employees who are offered the individual coverage HRA
  • The HRA must be offered on the same terms to all participants within a class
  • Participants must be allowed to opt out of and waive future reimbursements from the HRA once per plan year
  • The employer must implement “reasonable procedures” designed to substantiate that the participants and dependents are actually enrolled in individual health insurance coverage
  • The employer must provide written notice to eligible participants containing certain information.

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Excepted Benefits HRA: This ruling allows employers who offer traditional group health coverage to offer an HRA up to $1,800 per year (as adjusted) to cover certain qualified medical expenses, including premiums for the following types of plans. An excepted benefit HRA cannot reimburse premiums for individual health coverage, or health coverage under a group health plan (except as stated below), or Medicare Parts B or D.

  • Individual or stand-alone vision and dental plans, accident-only coverage, workers’ compensation coverage, or disability coverage
  • Short-term, limited-duration insurance plans
  • COBRA coverage.

For more information, download the bulletin.

NIS is gathering information on the new ruling and evaluating how this may or may not affect our customers with HRAs. Stay tuned to our blog for the latest developments.

National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Ken Zastrow

Ken Zastrow

Ken Zastrow enjoys establishing a strong rapport with his clients. He believes that education is key in helping them understand their benefit plans. Ken has a strong background in underwriting and post-employment benefits. As Employee Benefits Consultant at National Insurance Services, Ken is responsible for the overall assessment and management of all an employer’s benefit plans including claim reconciliation, policy changes, renewals, and medical and dental analytics. He is also well versed in compliance, benefit integration, and early retiree benefits. Ken is a licensed insurance agent (Health, Life, Series 6 and Series 63) as well as a registered financial representative with GWN Securities. He works with schools, cities, and counties in Wisconsin.