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Final HRA rule expands options for employers

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Employers can reimburse for individual coverage in 2020

The IRS released a final rule last week expanding Health Reimbursement Arrangements, providing employers a new option in helping employees access healthcare and health coverage.

Originally released last fall, the new rule would allow employers to reimburse employees for individual health coverage beginning in January 2020. An Obama-era regulation prohibited employers from reimbursing employees for individual coverage, though the 21st Century Cures Act of 2016 allowed employers with fewer than 50 employees to do so.

Here are three things to know about the new regulations, which apply to employers of any size.

1. The new rule creates two kinds of HRAs

The first, called an Individual Coverage HRA (ICHRA) would allow employers to provide employees with funds to purchase major medical coverage.

The second, called an excepted benefit HRA, allows employers to provide up to $1,800 per year to employees, who can use the money to pay directly for out-of-pocket healthcare costs or purchase short-term plans.

2. Employers cannot discriminate with HRAs

An employer cannot discriminate against older or sicker workers through an ICHRA program, nor can provide employees with the choice between an ICHRA or a traditional group health plan.

3. Private exchanges can help employees evaluate their options

Employers and brokers can help employees determine which options are available to them, but must remain neutral across the available plans. A private exchange that allows employees to search and compare options can help workers find the plan option that best suits their needs. 

Bernard Benefits advisors have over a decade of experience assisting employers in finding the best health plan strategy for their organization and employees. To speak with a Bernard Benefits advisor about how we can help create a sustainable benefits package for your team, click below.

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