ILMA Compoundings – September 2019 - 43

WASHINGTON LANDSCAPE

Health Care With
Choice: HRAs
By Matthew Levetown

H

ealth care costs are expensive,
and providing health insurance
is a hefty burden for most
employers. Thanks to regulations
promulgated this summer, employers
will be able to offer new Health Reimbursement Arrangements (HRAs)1 to
employees that can help alleviate the
expenses of managing and balancing
insurance costs. HRAs are benefits
offered by employers to help pay for
health care expenses for qualified
medical expenses, such as substance
abuse treatment or psychological
care, among others. Currently, HRAs
cannot be used to pay the premiums
of employees who choose to obtain
their own health insurance. Under the
new rules, two new types of HRAs will
expand the benefits provided to both
employees and employers.
INDIVIDUAL COVERAGE HRA
Beginning Jan. 1, 2020, employers that
do not offer any group health insurance
will be able to provide individual coverage HRAs (ICHRAs), which allow
employees to purchase their own health
insurance. The premiums are paid by
the ICHRA, and employees will not
have to declare the reimbursement
as taxable income. The individually
selected plans can be on or off existing
health exchanges, and the employer
ICHRA can be used to pay qualified
expenses such as deductibles that are
chosen before the plan begins.
Employers will have the option to
provide different levels of contributions
to different classes of employees, such
as salaried versus hourly workers.

However, any ICHRA offered to one
class of employees must be offered to
all members of that class. Benefits may
also be altered based on categories,
such as age and number of dependents,
granting greater flexibility to the
employer in crafting a benefits plan.
It should be noted that if one class
of employees is offered group health
insurance, any ICHRAs created for other
classes of employees are subject to minimum-size rules based on the expected
number of employees. For example, if
fewer than 100 people are employed, any
ICHRA must cover at least 10 people.
EXCEPTED BENEFIT HRA
For employers that do offer group
coverage, excepted benefit HRAs
(EBHRAs) will provide fixed coverage
for employees who do not enroll in the
offered plans. EBHRAs are limited to
inflation-indexed annual contributions,
starting at $1,800. The "excepted
benefits" portion of the HRA only
allows payment for benefits that are not
covered by provided group plans in an
effort to avoid double dipping.
CHALLENGES
The benefits provided by the new HRA
rules currently are speculative and may
be more difficult to implement effectively, similar to the Affordable Care Act
before them. Like Association Health
Plan (AHP) regulations issued by the
Trump administration, the HRA rules
are likely to be challenged in the courts
before implementation. Currently, AHP
regulations are "unlawful," according to
a federal judge in Washington D.C.,

who called provisions of the final rule
"absurd." The crux of the debate is
whether AHPs are an attempt to chip
away at the Affordable Care Act after
the Trump administration failed to
successfully repeal the act, a charge that
also has been levied at the new HRA
regulations. If both HRA and AHP
rules are ultimately upheld, they offer
small businesses numerous avenues to
save health care administrative costs
by bundling with other businesses and
offering a fixed contribution.
CONCLUSION
With expanded coverage options,
ILMA members can craft health care
plans that better meet their needs,
especially smaller businesses that have
opted against providing group coverage. ICHRA plans will allow some
reimbursement for covered employees
currently on individual plans or allow
dissatisfied workers to pick an insurance plan that works best for their
needs. Lowered administrative costs,
increased individual choice and tax-free
contributions will help keep employees
healthy and provide an option for small
businesses seeking to compete against
big business health benefit plans.
1 www.federalregister.gov/documents/
2019/06/20/2019-12571/health-reimbursementarrangements-and-other-account-basedgroup-health-plans

Levetown serves as associate
counsel to ILMA through
Bassman, Mitchell, Alfano &
Leiter Chtd. He may be
reached at 202-466-6502 or mlevetown@
bmalaw.net.

43


https://www.federalregister.gov/documents/2019/06/20/2019-12571/health-reimbursement-arrangements-and-other-account-based-group-health-plans

ILMA Compoundings – September 2019

Table of Contents for the Digital Edition of ILMA Compoundings – September 2019

LETTER FROM THE CEO
INSIDE ILMA
WHAT’S COMING UP
NEW MEMBERS
INDUSTRY RUNDOWN
IN THE KNOW
INTERNATIONAL INSIGHT
MARKET REPORT
ON WITH THE WIND
IN SUPPORT OF SATISFACTION
SUSTAINABILITY HAS ARRIVED
BUSINESS HUB
COUNSEL COMPOUND
WASHINGTON LANDSCAPE
IN NETWORK
MEMBER CONNECTIONS
PORTRAIT
ILMA Compoundings – September 2019 - Cover1
ILMA Compoundings – September 2019 - Cover2
ILMA Compoundings – September 2019 - 1
ILMA Compoundings – September 2019 - 2
ILMA Compoundings – September 2019 - LETTER FROM THE CEO
ILMA Compoundings – September 2019 - INSIDE ILMA
ILMA Compoundings – September 2019 - 5
ILMA Compoundings – September 2019 - 6
ILMA Compoundings – September 2019 - 7
ILMA Compoundings – September 2019 - 8
ILMA Compoundings – September 2019 - 9
ILMA Compoundings – September 2019 - WHAT’S COMING UP
ILMA Compoundings – September 2019 - 11
ILMA Compoundings – September 2019 - 12
ILMA Compoundings – September 2019 - NEW MEMBERS
ILMA Compoundings – September 2019 - INDUSTRY RUNDOWN
ILMA Compoundings – September 2019 - 15
ILMA Compoundings – September 2019 - 16
ILMA Compoundings – September 2019 - IN THE KNOW
ILMA Compoundings – September 2019 - INTERNATIONAL INSIGHT
ILMA Compoundings – September 2019 - 19
ILMA Compoundings – September 2019 - MARKET REPORT
ILMA Compoundings – September 2019 - 21
ILMA Compoundings – September 2019 - ON WITH THE WIND
ILMA Compoundings – September 2019 - 23
ILMA Compoundings – September 2019 - 24
ILMA Compoundings – September 2019 - 25
ILMA Compoundings – September 2019 - 26
ILMA Compoundings – September 2019 - 27
ILMA Compoundings – September 2019 - IN SUPPORT OF SATISFACTION
ILMA Compoundings – September 2019 - 29
ILMA Compoundings – September 2019 - 30
ILMA Compoundings – September 2019 - 31
ILMA Compoundings – September 2019 - SUSTAINABILITY HAS ARRIVED
ILMA Compoundings – September 2019 - 33
ILMA Compoundings – September 2019 - 34
ILMA Compoundings – September 2019 - 35
ILMA Compoundings – September 2019 - 36
ILMA Compoundings – September 2019 - 37
ILMA Compoundings – September 2019 - BUSINESS HUB
ILMA Compoundings – September 2019 - 39
ILMA Compoundings – September 2019 - COUNSEL COMPOUND
ILMA Compoundings – September 2019 - 41
ILMA Compoundings – September 2019 - 42
ILMA Compoundings – September 2019 - WASHINGTON LANDSCAPE
ILMA Compoundings – September 2019 - MEMBER CONNECTIONS
ILMA Compoundings – September 2019 - 45
ILMA Compoundings – September 2019 - 46
ILMA Compoundings – September 2019 - 47
ILMA Compoundings – September 2019 - PORTRAIT
ILMA Compoundings – September 2019 - Cover3
ILMA Compoundings – September 2019 - Cover4
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