Health Reimbursement Arrangement Expansion

In response to President Trump’s October 12, 2017 Executive Order, the Departments of Health and Human Services, Treasury and Labor issue the proposed rule expanding Health Reimbursement Arrangements. This third and final rule aims to provide employers with additional options when offering health benefits to their employees while providing employees with greater opportunity to purchase coverage of their choosing.

The October 29, 2018, proposed rule allows employers to integrate their HRA with individual health insurance coverage as long as it is nondiscriminatory in its implementation.

HRA Integration Requirements

For an HRA be considered an ACA-compliant health plan, it must be integrated. This new proposed rule provides new integration rules applicable to individual health coverage integrated with an HRA. To meet integration requirements, employers and plan sponsors must:

  • Require participants and dependents to be enrolled in individual health insurance coverage for each month they are enrolled in an HRA
  • Prohibit offering an HRA and traditional insurance to the same class of employees
  • Offer HRA integrated with individual coverage on the same terms to each participant within the class
  • At least annually, allow participants to opt-out of, and waive , future reimbursements from HRA
  • Regularly substantiate and verify enrollment in individual coverage
  • Provide notice to eligible participants regarding offer and enrollment of HRA.

It is important to note that when considering the eligibility of these premiums for pretax treatment under an employer’s cafeteria plan, employers may not allow salary reductions to purchase a qualified health plan through the exchange.

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