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Proposed Regulations Regarding HRA Expansion

During the week of October 22, 2018, the Departments of Treasury, Health and Human Services, and Labor (collectively "the Departments") released proposed regulations to expand Health Reimbursement Arrangements (HRAs) and their usability. These proposed regulations come in response to President Trump's request in October 2017 that the Departments develop policies to increase the usability of HRAs and to expand employers' abilities to offer HRAs to employees by allowing HRAs to be used in tandem with non-group coverage. If finalized, these rules would not become effective until January 1, 2020.  


What changes to HRAs are being proposed?
The following changes to HRAs are being proposed:
1. The proposed regulations would allow HRAs to reimburse employees for the cost of individual health insurance coverage. Employers would be permitted to request verification of enrollment before reimbursement is made. 
2. The proposed regulations would allow employers with HRAs that are integrated with an individual health plan to use pre-tax cafeteria plan salary reductions for their employees to pay any portion of the individual premium not covered through the HRA. 
3. The proposed regulations would allow employers offering traditional employer-sponsored coverage to offer an HRA up to $1,800 per year (indexed in the future) to reimburse employees for certain qualified medical expenses. These include premiums for short-term limited duration plans.
4. The proposed regulations would establish a special enrollment period through the Exchange for individuals who gain access to an integrated HRA or Qualified Small Employer HRA (QSEHRA). This special enrollment period would allow an employee to enroll in individual coverage or change plans.
The provisions of the proposed regulations would be available to all employees within a particular class, but may be adjusted due to age and family size.


When will these changes take effect?
A comment period is open until December 28, 2018. If finalized, the proposed regulations will become effective for plan years beginning on or after January 1, 2020.


What action is required?
There is no action required at this time. We will keep you informed as this develops.


Please contact your Client Management team if you have any questions.


This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.