Final Rule Announced for 2020: HRAs that Reimburse Individual Health Premiums

Change to Take Effect for 2020 Plan Years

A new final rule lets all employers offer health reimbursement arrangements (HRAs) to pay for employees’ individual health insurance policy premiums, if certain conditions are met. Currently, many employers are prohibited from offering such HRAs. The rule was released by the U.S. Departments of Labor, Health and Human Services, and the Treasury on June 13; it takes effect for plan years beginning on or after Jan. 1, 2020.
 
In general, the final rule permits an HRA to reimburse premiums for individual health insurance policies only if:

  • Individuals verify their enrollment in individual health insurance coverage;
  • The HRA is offered on the same terms to all employees within a class (with limited exceptions);
  • The employer does not offer the same employee both a traditional group health plan and the HRA;
  • Participants can opt out of the HRA annually; and
  • Employers provide eligible participants with a written notice describing the HRA’s terms and its interaction with the premium tax credit.

The final rule also allows employers to offer “Excepted Benefit HRAs” in conjunction with traditional group health plans, if certain conditions are met.
  
For more information, see Questions and Answers prepared by the Department of Health and Human Services.