New Individual Coverage and Excepted Benefit HRAs: DOL Guidance and Compliance Challenges for Employers

On June 13, 2019, the Departments of Labor, Treasury, and Health and Human Services (the “Tri-Agencies”) issued final regulations regarding health reimbursement arrangements (HRAs). Effective for plan years beginning on and after January 1, 2020, the new rules allow employers to integrate HRAs with health insurance coverage purchased on the individual market and with Medicare (individual coverage HRAs or “ICHRAs) so long as they implement strict plan design mechanisms and administrative procedures. The final rules also allow sponsors to establish nonintegrated general-purpose excepted benefit HRAs (“EBHRAs”).

HRAs are account-based health plans funded with employer contributions to reimburse eligible participants and dependents for medical expenses. Under the new rules, employers can use ICHRAs to provide employees and their spouses and tax dependents with tax-preferred funds to pay for the cost of health insurance coverage purchased on the individual market subject to certain conditions.

The rules also create a new type of excepted-benefit HRAs, which lets employers that offer traditional group health plans provide a general-purpose HRA with limited annual amounts even if the worker doesn't enroll in the traditional group plan.

ERISA counsel and employers must understand the requirements for designing and implementing the new HRAs and avoid compliance pitfalls under the new rules.

Listen as our panel provides an in-depth analysis of the final rules on HRAs, critical considerations for plan design, and notice and claim administration challenges, as well as offers best practices to ensure compliance.