Today, the U.S. Departments of the Treasury, Labor, and Health and Human Services (tri-agencies) issued a pre-publication version of a Final Rule expanding permissible uses for Health Reimbursement Arrangements (HRAs). This rule allows employers to reimburse the cost of individual market coverage purchased by employees and to fund the purchase of excepted benefits. The final rule effectively overturns guidance first issued by the IRS in 2013 that established such a reimbursement scheme as violating the Public Health Service Act, therefore subject to civil penalties.
The Proposed Rule was published October 29, 2018. AHIP submitted comments on December 27, 2018 emphasizing the importance of protecting consumers with non-discrimination protections and the need to exclude forms of non-comprehensive coverage, including short-term limited duration insurance (STLDI), from the permitted HRA uses, as well as to preserve HIPAA Excepted Benefits.
The tri-agencies finalized the rule largely as proposed, but with some modifications. This rule creates two new types of HRAs: an Individual Coverage HRA (ICHRA) and an Excepted Benefit HRA (EBHRA). In response to comments from AHIP and others, the agencies are not permitting integration of STLDI with an ICHRA. However, STLDI may be purchased with EBHRA funds. Non-discrimination provisions were retained, expanded, and clarified. The final rule has an effective date of August 19, 2019, with an applicability date at the beginning of plan year 2020, meaning that employers may begin offering ICHRAs and EBHRAs on January 1, 2020 and employees can begin enrolling November 1st during individual market open enrollment.
Additional information on the final rule from the Center for Consumer Information and Insurance Oversight (CCIIO), including FAQs, can be found here.