Final Ruling Expands HRAs to Pay for Individual Coverage (ICHRA)
On June 13, the U.S. Treasury Department, the Department of Labor, and the Department of Health and Human Services issued a final ruling allowing employers of all sizes (that do not offer a group coverage plan) to provide employees with a new kind of health reimbursement arrangement (HRA), known as an individual coverage HRA (ICHRA).
Among other medical care expenses, Individual Coverage HRAs can be used to reimburse premiums for individual health insurance chosen by the employee, promoting employee and employer flexibility while also maintaining the same tax-favored status for employer contributions towards a traditional group health plan. Unlike QSEHRA, the new rule doesn’t cap contributions for ICHRA.
Employers can start offering Individual Coverage HRAs on January 1, 2020. Employees who want to take advantage of an Individual Coverage HRA with a start date of January 1, 2020 will need to enroll in individual health insurance during the open enrollment period at the end of 2019 (lasting from November 1, 2019 to December 15, 2019), unless they have Medicare.
Resources
- Read the Final Ruling
- Read the full FAQs
- Read SHRM’s recent article New Final Rule Lets Employees Use HRAs to Buy Health Insurance – The new rule introduces two new types of HRAs, Individual coverage HRAs and Excepted-benefit HRAs.
- Read BenefitsPRO’s article geared towards insurance brokers: New final HRA regulations expand options for employers – The final regulations could encourage employers to offer workers access to brokers and private health insurance exchange programs.
Copyright 2019
