You’ve likely been following the conversation around the proposed regulations to broaden HRA rules that began in October 2018.
The proposed regulation broadens health reimbursement account (HRA) rules to allow employers to offer an HRA that reimburses an employee’s individual insurance premiums or a standalone HRA that reimburses medical expenses of up to $1,800 a year. The rules were finalized on June 14, 2019 and will be effective for plan years beginning on or after January 1, 2020.
For the most part, the approved regulations are very similar to the proposal from last October and even provide helpful clarifications. Here are the major changes that you and employers need to take into account.
- New classes added for salary, hourly, and temporary workers
- Requirement for classes to have a minimum number of employees in certain situations
- Removed the "under age 25" class
- Limitation on contribution amount variance based on age within a class
- Guidance that neutral, unbiased assistance from agents, brokers, and technology will not be considered an impermissible employer endorsement of coverage
An in-depth outline of the HRA regulations can be found on Further’s Learning Center.
What employers need to know
With 2020 fast approaching, employers will want to review the rules and determine if either HRA is appropriate for their benefit plan. If an employer is considering offering either HRA, especially the ICHRA, they will need to:
- Modify plan documents and enrollment materials
- Determine the benefit amount, defining the scope of which expenses should be considered reimbursable
- Determine who would be offered the HRA
- Inform employees at least 90 days before January 1, 2020, as employees will need to have the opportunity to find individual coverage during the open enrollment period of November 1 to December 15, 2019
Employers are advised to work with knowledgeable consultants to implement these HRAs, ensuring the plan is compliant with the final rules. Employers also need to consider technology to help employees find coverage and smooth administration of the plan, especially the premium payments and substantiation process. For example, an employer must be careful not to endorse a particular insurance carrier for employees to purchase individual coverage, which could easily occur if an employer limits the debit card or the payment process to exclude certain carriers.
A final note: With these new regulations, employees would still be eligible for an HSA or FSA with either type of HRA. To be compatible with an HSA, the HRA could not reimburse out-of-pocket medical expenses before the HSA deductible is met.
If you have questions related to the new regulations, or need more information, visit the Learning Center, or reach out to your Further representative.