Employers Appreciate Increased Flexibility in New HRA Rule

By Judy Packer-Tursman

The Trump administration touts its recent release of final regulations expanding employers' flexibility in offering health reimbursement arrangements (HRAs) to their employees as promoting more consumer choice and likely to cover more uninsured workers.

Under the regulations, starting on Jan. 1, 2020, employers will be able to offer stand-alone HRAs to help certain employees buy individual health insurance policies. Or they may offer "excepted-benefit" HRAs to reimburse employees for certain medical expenses with annual employer contributions of up to $1,800.

"Philosophically, it's a big change, giving employees flexibility to go out on the [individual] market and find coverage," says Nicole Tapay, principal at Avalere Health. "I think in the near term you'll see most likely the small employers will be giving it a closer look, [deciding] whether they want to use this flexibility to give them more predictability on costs." Insurers offering coverage in the individual market "may see it as an opportunity," she says, while those offering group plans may want to tweak their offerings over time to anticipate employer shifts.

The HRA regulations come with guardrails to protect the individual market. "Opponents will say [these regulations] will cause employers to dump their older and sicker workers onto the individual market," says Dorian Smith, national practice leader for Mercer’s law and policy group, "while proponents will say there are guardrails."

Smith notes Mercer's clients generally are larger employers, most of whom have already decided on their 2020 offerings and would need to provide 90-day notice of changes for calendar year plans.

But for mid-2020 or calendar year 2021, "they might consider [HRAs] for certain employees, like part-time workers not eligible for the group health plan….It still provides a way to offer something different from the employer across the street."

From Health Plan Weekly