FINAL RULE RELEASED ON HRA'S

On June 13, 2019, the Departments of Labor, Health & Human Services and Treasury released final rules concerning Health Reimbursement Arrangements (HRAs).  The 497-page rule includes the creation of two new types of HRAs, the "Individual Coverage HRA” and the "Excepted Benefit HRA."

Advantages of the Individual Coverage HRA include, but are not limited to:

• Funds can be used to reimburse the employee's premiums for an individual health insurance policy.
• Reimbursements made to employees do not count towards the employee's taxable wages.
• The employer can choose to roll-over unused amounts into the following year.
• Coverage can be offered to different classes of employees (e.g.; full-time, part-time, seasonal, salaried, hourly)
• An offer of the Individual Coverage HRA represents an "offer of coverage" under the employer mandate, however, contributions must meet affordability guidelines. The IRS will release further guidelines regarding this later.

The Individual Coverage HRA also comes with restrictions and regulations including but not limited to:

• An offer of an Individual Coverage HRA cannot be made to any employee that is offered a traditional group health plan.
• If an offer of coverage is made to a class of employees, there is a minimum class size that is required. Size is typically 10% of that specific class of employees. For example, if an employer has 200 employees, a minimum of 20 employees would have to be in a specified class.
• Contributions can be in any amount that the employer chooses, but contributions must be consistent for all employees in a specified class.
• The employer must provide notice of the Individual Coverage HRA to employees.
• The employer must be able to substantiate that the employee is enrolled in an individual plan or Medicare (model notices are available).
• The employer must notify employees on an annual basis that the individual health insurance is NOT subject to ERISA.

The final rule also created the "Excepted Benefit HRA" which, starting in January of 2020, will permit employers to finance additional medical care. Employees can use the HRA without having to be enrolled in the group's traditional health plan.

The requirements associated with the "Excepted Benefit HRA" include, but are not limited to:

• The annual contribution is capped at $1,800.
• It must be offered in conjunction with a group health plan, but there is no requirement for the employee to enroll in that plan.
• The "Excepted Benefit HRA" cannot be used to fund group health or Medicare premiums.
• It can fund premiums for dental, vision, or short-term limited duration insurance.

Employers who want to offer the "Individual Coverage HRA" for January 1, 2020, can do so but employees will need to enroll in an individual plan during the 2019 open enrollment period (November 1, 2019 - December 15, 2019).

From Benefitmall, June 20, 2019

New HRA rules could allow businesses to circumvent ACA's employer mandate

Currently it is a violation of the ACA for large employers to allow health reimbursement arrangements to be used to help pay workers’ premiums instead of providing group health insurance. Under the ACA, large employers must offer affordable minimum essential coverage to 95 percent of employees in order to avoid penalties.

“Under current ACA rules there is a blanket prohibition, which a lot of employers in the under-200 employee market were bummed about. They would rather have a defined-contribution approach,” Welle said. 

The Trump administration under Executive Order 13813, issued in October 2017, proposed expanding the defined-contribution approach to employer health insurance coverage as part of an overall plan to repeal and/or replace the ACA and promote competition in U.S. health care. The proposals also included allowing association health plans and limited-duration, limited-benefit health plans. While legislation overturning the ACA seems dead, some rule-making continues.

Under the proposed HRA rules, employers generally would have to contribute a fixed amount into each individual HRA sufficient that any remaining premiums the employee would have to pay wouldn’t exceed a percentage of his or her household income to be considered affordable under the employer mandate, in order to avoid penalties, Welle said.

If finalized, the new rules wouldn’t take effect until Jan. 1, 2020, at the earliest. Welle said he believes that most large employers in the interim would probably continue to offer group health plans because they provide employers with a valuable recruitment incentive. In the latest statistics from Kaiser Family Foundation, roughly 16 million Americans were enrolled in the ACA marketplace or a Basic Health Program.

“But in the future, I see employers in the range of 50 to 200 employees who are burdened by the administrative responsibilities and the cost of administering health plans say this is a way they can do something for their employees but off-load some of the responsibilities. It is still developing and there is nothing to hang their hats on yet, but in 2021 or 2022 I can see the [smaller ones] saying this might be a good solution for us,” Welle said.

Pressly said the employers who right now are most interested in this are those with 50 to 100 workers and those who employ lots of part-time workers, as this could be a solution for providing coverage for them.  

But for larger employers, he said, “it looks really appealing but the way the rules are written if you roll it out for one class of employees, you will have to push it to all employees in that class and the benefits vary wildly from state to state.”

Employers and employees might not fully grasp all the differences between the individual health insurance marketplaces in the states and its limitations, and employer-sponsored group health insurance coverage, Pressly said. Resistance could arise when top executives accustomed to group health plans’ flexibility and coverage for expensive procedures such as in vitro fertilization encounter the limitations of many individual health insurance plans, including differences in what states require them to provide, he said.

In 2017, only 7 percent of the total U.S. population were in non group health insurance and 49 percent received employer-provided insurance. A combined 35 percent were on Medicaid or Medicare; 1 percent were on some other public plan and 9 percent were uninsured, according to the Kaiser.

Pressly said, “This goes hand-in-hand with state insurance markets and you really need to understand what that is, the cost and the coverage that is available to know what the ultimate employee experience is going to look like.”

Excerpt By:By MP McQueen | January 28, 2019 at 10:58 AM 

Health Saving Accounts and Over the Counter Medications for 2011

Effective January 1, 2011 you are not allowed to use HSA (Health Savings Account) FSA (Flexible Spending Account), MSA (Medical Savings Account) or HRA (Health Re-imbursement Arrangement) 
dollars for over the counter medications, unless they are prescribed.  In addition, for HSA and MSA's, the penalty tax if you do, goes from 10% to 20% and 15% to 20% respectively.  I have no idea, with the exception of raising more revenue, why the federal government would either disallow the OTC medications from being coverable or increasing the penalty.  In addition, how are they going to police this?  It would seem the increase of government employees needed to oversee this would negate any funds risen.  Anyway, if you have your physician prescribe your over-the-counter medication you are able to use your HSA and other named accounts to pay for it.  You do not need to have it filled by a pharmacist, just have the prescription on file.  Also, see if you can have the doc write it for a yearly supply.