On the Third Hand: HRAs

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.