The Departments of Labor, Treasury and Health & Human Services jointly issued a proposed rule that would permit HRAs to reimburse employees for the cost of individual health insurance coverage, subject to certain conditions. These conditions mitigate the risk that health-based discrimination could increase adverse selection in the individual market, and include a disclosure provision to ensure employees understand the benefit.
In addition, the proposed rule would:
- Allow employers offering traditional employer-sponsored coverage to offer an HRA of up to $1,800 per year (indexed annually for inflation) to reimburse an employee for certain qualified medical expenses, including standalone dental benefits and premiums for short-term, limited-duration insurance plans.
- Extend the tax advantage for traditional employer group insurance (exclusion of premiums, and benefits received, from federal income and payroll taxes) to HRA reimbursements of individual market insurance premiums.
Provide plan sponsors with assurance that the individual health insurance coverage the premiums of which are reimbursed by an HRA or a qualified small employer health reimbursement arrangement (QSEHRA) does not become part of an ERISA plan, provided certain conditions are met
Provide a special enrollment period in the individual market for individuals who gain access to an HRA integrated with individual health insurance coverage or who are provided a QSEHRA.
Comments are due December 28, 2018.