New final health reimbursement arrangement (HRA) regulations could encourage U.S. employers of all sizes to give workers cash the workers could use to buy their own health coverage.
The final regulations could also encourage employers offer workers access to health insurance brokers, and to private health insurance exchange programs, to help workers understand their health coverage options.
The federal “tri agency” team — the Internal Revenue Service, the Employee Benefits Security Administration, and the U.S. Department of Health and Human Services — posted a preview version of the final HRA regulations Thursday.
(Related: Look Before You Leap: The New Expanded HRAs)
The tri agencies are preparing to publish the regulations in the Federal Register, an official government publication, June 20.
Opponents of “cash for coverage” HRAs could the courts, or Congress, to keep the regulations from taking effect
Even if the regulations take effect on schedule, restrictions in the regulations, market forces or other factors could keep the regulations from working as the drafters expect.
If the regulations take effect as written, and work as the drafters expect, they will apply starting with the 2020 plan year.
An HRA is vehicle that an employer uses to help employees pay for health care and health insurance.
U.S. employers have been offering HRAs and similar arrangements since the 1960s.
The Internal Revenue Service established HRA rules in 2002. Under federal law, an employer must offer another type of personal health account, the health savings account (HSA), with high-deductible health insurance. An HRA is somewhat less flexible in some ways, but an employer can offer an HRA together with ordinary, low-deductible, or no-deductible, health insurance.
When the administration of former President Barack Obama began setting up the Affordable Care Act framework for health insurance, in 2010, some health insurers and policymakers wanted to limit use of HRAs, to keep employers from using cash-for-coverage HRAs to push high-cost employees out of their health plans. The Obama administration tried to block use of cash-for-coverage HRAs, by defining a cash-for-coverage HRA as a group health insurance plan.
Obama administration officials held, for example, that, like a group health plan operating under Affordable Care Act rules, a cash-for coverage HRA would have to offer coverage without annual or lifetime benefits caps.
In the 21st Century Cures Act of 2016, Congress required the Obama administration to let small employers offer cash-for-coverage HRAs, or qualified small employer health reimbursement arrangements (QSEHRAs).
When Donald Trump became president, he made expanding employers’ access to personal health account programs, including HRA programs, a priority. He later developed a health cost control strategy that made expanding HRA access one of his top three priorities.