The Departments of Labor, Health and Human Services, and the Treasury (collectively, "the Departments") finalized rules creating two new Health Reimbursement Arrangement (HRA) options available to employers beginning January 2020. These final rules generally follow the proposed guidance (issued in October 2018) with some notable changes.
This article addresses the new Excepted Benefit HRA ("EB HRAs"). Individual Coverage HRAs are discussed in a separate update.
Briefly, beginning with the first plan year on or after January 1, 2020, employers are permitted to offer EB HRAs. An EB HRA is generally available when an employer offers a traditional group health plan, subject to certain conditions, including a $1,800 maximum annual benefit.
The regulations create an EB HRA. This type of HRA is different from an HRA integrated with a group health plan or an individual coverage HRA and is subject to more restrictive conditions.
To be considered an EB HRA (or other account-based plan), the arrangement must meet the following conditions:
It is important to note the following:
Employers may want to look at whether offering an EB HRA is an option for their employee benefit plan strategy in 2020 or beyond. Employers interested in adding an EB HRA to their benefit offerings should review the final rule and supporting guidance and work with their benefits consultant and third-party administrators to understand the various requirements.
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