New Rules Expand Use of HRAs

Heath reimbursement accounts (“HRAs”) have long been subject to various restrictions under the ACA.  However, as of 2020, HRAs may be used to reimburse individual health coverage premiums. This signals a departure from the previous prohibition on integrating HRAs with individual coverage. Employers of all sizes will now be able to offer individual coverage HRAs, although specific notice and procedural requirements apply. The new rules also allow employers to offer “excepted benefit HRAs” to finance other types of medical expenses (for example, copays, deductibles and excepted benefit premiums). Excepted benefit HRAs will essentially allow for reimbursements of up to $1,800 per year. While the excepted benefit HRA must be offered in conjunction with a traditional group health plan, the employee is not required to enroll in group health coverage (or in any other coverage) which distinguishes the excepted benefit HRA from other HRAs.  Employers can begin offering these new benefits on January 1, 2020.

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