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Life Health > Health Insurance > Health Insurance

On the Third Hand: HRAs

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Idea: If Republicans in the House have any interest whatsoever in showing that they can work with Democrats, maybe they could do something about how the Patient-Centered Outcomes Research Institute (PCORI) fee is set to affect health reimbursement arrangements (HRAs).

HRAs are the older brothers of health savings accounts (HSAs).

An HSA is more flexible, but, before you can have an HSA, you must also have a high-deductible health insurance policy that meets many complicated federal requirements.

If an employer wants to set up an HRA, the employer can provide the HRA together with traditional, low-deductible major medical benefits, or no major medical coverage at all. Employees can still roll over the value stored in the accounts at the end of the year, without facing the kind of “use it or lose it” pressure that holders of flexible spending accounts (FSAs) face.

The Patient Protection and Affordable Care Act (PPACA) is about to start health plans to pay a $1 per head PCORI fee, to fund efforts to find out which medical treatments provide the most bang for the health care buck. The fee is set to rise to $2 per head for policy or plan years ending on or after Oct. 1, 2013.

The Internal Revenue Service (IRS) has found a strange twist in the law: Apparently, the definitions involved are such that an employer with a self-insured health plan and an HRA program can pay just one PCORI fee per covered life.

An employer with a fully insured health plan and an HRA program will have to pay two PCORI fees per covered life.

To me, that sounds really dumb. Whether you like HRAs or PCORI fees or not, why on earth should the PCORI fee rules be different for an HRA sponsor with a fully insured health plan and an HRA sponsor with a self-insured health plan?

The only serious PPACA fix bill I can remember the Republicans getting through Congress was the 1099 fix bill, which canceled the effects of PPACA Section 9006. PPACA Section 9006 was so onerous that it could have required free-lancers who spent more than $600 at Office Depot to send Office Depot a Form 1099 at the end of the year.

Maybe fixer bills tend to be bills that cost the government money. Maybe the PPACA Section 9006 provision could have brought in some tax revenue, but the idea of independent contractors having to send 1099 forms to Office Depot was pretty stupid in a bipartisanly self-evident way. Killing the provision was a good bipartisanship-building exercise for members of Congress.

To me, it looks as if passing a fixer bill that would let employers with fully insured plans and HRA programs pay just one PCORI fee per covered life would be another great team-building project.

On the one hand, the HRA fix would cost a little revenue.

On the other hand, I don’t think an HRA fix bill would cost much revenue.

On the third maybe: Maybe the House Republicans and House Democrats would rather keep clawing eternally at one another’s throats than even think about passing a bill that would make a strange part of PPACA a little less strange.

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