October 26, 2018
Regulators have issued a proposed rule to allow health reimbursement accounts (HRAs) to be used under certain conditions to purchase coverage in the individual market, which could provide a potential defined-contribution option for employer-provided health care benefits should Congress zero out the ACA’s employer mandate penalty.
The proposal primarily affects small employers. Fulfilling the requirement in Executive Order 13813 to “increase the usability of HRAs,” it also allows COBRA premiums and excepted benefits such as vision and dental coverage, long-term care insurance, Medicare supplement coverage, and health flex plans.
Other aspects of the proposal include:
HRAs still would not satisfy the ACA employer mandate and large employers would still be subject to those penalties, although the IRS plans to issue further guidance regarding a safe harbor for determining whether an HRA used to purchase individual health coverage meets the ACA’s minimum value standard.
Outlook: A final rule is not expected until the end of 2019 and will likely be challenged in court.