The Trump administration recently released a proposed rule that, if finalized, would expand access to Health Reimbursement Arrangements (HRAs). The proposed rule, issued by the Departments of Health and Human Services (HHS), Labor (DOL), and Treasury, would lift restrictions on the use of employer-sponsored benefit accounts to purchase health insurance on the individual marketplace. The proposed rule is a result of the Promoting Healthcare Choice and Competition executive order signed by the president in October 2017.
As currently written, the administration’s proposal would overturn the ACA provision which limits the use of traditional HRAs to pay for only out-of-pocket medical expenses, but not insurance premiums. By allowing employees to purchase health coverage on their own with employer funds, administration officials believe more competition will be brought to the individual marketplace.
Under the proposed rule, HRA funds would remain exempt from federal and payroll income taxes for employers and employees. Additionally, employers with traditional coverage would be permitted to reserve $1,800 for supplemental benefits like vision, dental and short-term health plans.
If finalized, the proposed regulation would go into effect on January 1, 2020. Officials estimate 10 million people will purchase insurance through HRAs, including 1 million people that were not previously insured.
The Employers Council on Flexible Compensation approves of the proposed regulations, stating:
“ECFC appreciates the efforts of the Administration for proposing regulations that would expand the opportunities for employers to offer HRAs to their employees. This is a positive step for employers and American workers. ECFC will continue to review the proposed regulations and look forward to providing additional comments to the Administration.”
DataPath, Inc. is an active participant in ECFC.
Recent history of healthcare proposals
During his presidential campaign and since his inauguration, President Trump has emphasized consumer directed healthcare accounts as part of healthcare reform. There have also been several Congressional bills that would have expanded Health Savings Account (HSA) and Flexible Spending Account (FSA) usage. Here’s a brief look at some of those other healthcare initiatives:
Health Savings Account Expansion
Prior to inauguration, the administration’s transition website proclaimed, “A Trump Administration will work with Congress to repeal the ACA and replace it with a solution that includes Health Savings Accounts (HSAs)… to create a patient-centered healthcare system that promotes choice, quality, and affordability…”
Promoting Healthcare Choice and Competition Across the United States
Through an executive order signed October 12, 2017, the president lifted some insurance restrictions that were put in place by the Affordable Care Act (ACA). The Departments of Labor, Treasury, and Health and Human Services were asked to review association health plans, changes to HRAs that would allow employees to pay insurance premiums, and expansion of the availability of low cost, short-term limited duration insurance.
American Health Care Act (AHCA)
In March 2017, House Republicans passed the AHCA, though the legislation came just short of passing in the Senate. The AHCA outlined multiple changes to HSAs, FSAs, and COBRA. In addition, the effective date for the ‘Cadillac Tax’ would have been delayed until 2025.
DataPath, Inc. is a leading technology provider of cloud-based benefits administration solutions for employer-sponsored benefits, including HRAs, HSAs, FSAs, and COBRA.