The Department of Labor (DOL), Treasury Department and Department of Health and Human Services (HHS) recently proposed a new rule designed to expand the use of health reimbursement arrangements (HRAs), partially by permitting HRAs to be integrated with individual health insurance coverage.
By their terms, HRAs and qualified small employer HRAs (QSEHRAs) cannot generally satisfy the Affordable Care Act (ACA) requirements. Because of this, the agencies have found that HRAs cannot be used to reimburse employees for the cost of individual health insurance premiums in the past.
Under the new rules, employers would be allowed to provide HRAs to employees that could be used to reimburse those employees for individual health insurance purchased through the health insurance marketplaces if certain specific criteria are satisfied. In summary, the employer would be required to verify that the employee and his or her dependents were covered by comprehensive individual health insurance, and the employer sponsoring the HRA would not be permitted to provide employees with an option between an HRA and traditional group health insurance. The HRA would have to be offered on the same terms of all employees in the same class, and an “opt out” option would be required.
We asked Professors Robert Bloink and William Byrnes, who are affiliated with ALM’s Tax Facts, and hold opposing political viewpoints, to share their opinions on the new proposed regulations and their potential impact on the health insurance marketplaces.
Below is a summary of the debate that ensued between the two professors:
Byrnes: Expanding access to HRAs is a great idea, the new rules would provide much-needed flexibility for business owners of all sizes to create an employer-sponsored health insurance package that best suits the needs of the particular business and its employees.
Bloink: These regulations are a red herring–they don’t go nearly far enough to ensure access to affordable health insurance for all Americans. For starters, they encourage business owners to direct employees to the individual insurance marketplaces instead of providing comprehensive group health coverage—which would be fine, if anything was being done to stabilize costs in the individual health insurance marketplaces themselves.