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3 Important Details in the New Individual Coverage HRA Regs

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Take Health Command has had a front-row seat on federal agency efforts to draft and complete the new individual coverage health reimbursement arrangement (ICHRA) regulations.

The Dallas-based startup already provides compliance services, employee enrollment services and other support services for the new ICHRA’s older sibling: the qualified small employer HRA (QSEHRA). The firm’s basic package of QSEHRA services costs $15 per employee per month.

Now the company is looking at the new ICHRA administration opportunity.

(Related: New Final HRA Regs Could Help Brokers Reach Employees)

If the regulations posted Thursday take effect as written and work as drafters at the Internal Revenue Service, the Employee Benefits Security Administration and the U.S. Department of Health and Human Services, employers will be able to use ICHRAs provide cash that employees can use to buy their own major medical coverage starting in January 2020.

Employers may be able to start moving employees into ICHRA programs for 2020 coverage this fall.

Under federal regulations, QSEHRAs were available only to small employers. The new ICHRAs will be available to employers of all sizes.

Jack Hooper, Take Command Health’s chief executive officer, said in a statement that he likes the look of the new regulations for ICHRAs, and for a related type of health account, excepted benefit HRAs. “We are excited to see their impact play out in the market,” Hooper said.

Here are three details Hooper noticed when he read the final regulations, according to a blog entry he posted today.

1. There are no ICHRA employer contribution limits.

The QSEHRA contribution limits are about $5,000 for single coverage and about $10,000 for a family.

2. Employees that suddenly move into either a QSEHRA or ICHRA program will be eligible for an individual major medical coverage special enrollment period.

Federal officials, state insurance regulators, insurers and Affordable Care Act exchange programs developed an “open enrollment period” system, or limits on when people can buy individual coverage without having a special reason to do so, in an effort to keep healthy people from waiting until they get sick to pay for coverage.

Federal regulators have been having the individual major medical open enrollment period run from Nov. 1 through Dec. 15 for the past few years.

The new ICHRA means that, if an employer finally gets its ICHRA program running in April, or June, employees will be able to use their ICHRA money to buy individual health coverage.

3. Regulators are using ICHRA program size rules to try to minimize the risk that employers will use ICHRA programs to shift sicker or older employers out of their traditional health plans.

In most cases, for example, employers with fewer than 100 employees will have to have at least 10 employees in an ICHRA class, and employers with more than 200 employees will have to have at least 20 employees in an ICHRA class, Hooper writes.

“We understand the regulators’ desire to limit adverse selection, but wish these had remained a little more flexible,” Hooper writes.


A preview version of the new final rule is available here.

A copy of the Take Command Health analysis of the final rule is available here.

— Read Does DOL’s HRA Proposal Go Far Enough? Bloink & Byrnes Go Thumb to Thumbon ThinkAdvisor.

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