June 14, 2019
Acting as another answer to President Trump’s executive order promoting increased choice and competition in health care, the US Departments of Health and Human Services, Labor, and the Treasury finalized a rule allowing employers to offer health reimbursement arrangements (HRAs) to their employees.
Beginning January 2020, employers will be able to offer HRAs that employees can use to pay premiums for Medicare Parts A, B, C, D or buy coverage in in the individual market. The new policy will give beneficiaries and their families more control of their health care.
“Too many Americans today have little say in how their healthcare is financed,” said US Department of Health & Human Services Secretary Alex Azar said in a press release. “President Trump has promised Americans that he will put them in control of their healthcare, and this expansion of health reimbursement arrangements will help deliver on that promise by providing Americans with more options that better meet their needs. This rule and other Administration efforts are projected to provide almost 2 million more Americans with health insurance.
Per an HHS press release, “When employers have fully adjusted to the rule, it is estimated this expansion of HRAs will benefit approximately 800,000 employers, including small businesses, and more than 11 million employees and family members, including an estimated 800,000 Americans who were previously uninsured.”
As costs of health insurance over the last decade have continued to climb, many small businesses have opted to not provide insurance for employees. Similarly, 80% of employers’ plans that do provide coverage often only offer one plan that might not meet the needs or satisfy the choices of employees.
“The HRA rule makes it easier for small businesses to compete with larger businesses by creating another option for financing worker health insurance coverage,” explained HHS in a press release. “The rule enables businesses to better focus on serving their customers and growing their businesses—and not on navigating and managing complex health benefit designs.”
In addition to providing employees with more choice in coverage, the policy is expected to spike competition as more people seek coverage in the individual market.
“In addition to allowing individual coverage HRAs, the HRA rule creates an excepted benefit HRA,” said HHS in the press release. “In general, this aspect of the rule permits employers that offer traditional group health plans to provide an excepted benefit HRA of up to $1,800 per year (indexed to inflation after 2020), even if the employee doesn’t enroll in the traditional group health plan, and to reimburse an employee for certain qualified medical expenses, including premiums for vision, dental, and short-term, limited-duration insurance.”
“By continuing to offer diverse health coverage choices, the Trump Administration ensures America has a healthy workforce,” said Labor Secretary Alex Acosta in a press release. “The HRA final rule offers millions of American workers more health coverage choices and portability. HRAs create a great opportunity for job creators to support their employees and for those employees to be empowered to make the best healthcare decisions for their families.”
HHS. U.S. Departments of Health and Human Services, Labor, and the Treasury Expand Access to Quality, Affordable Health Coverage Through Health Reimbursement Arrangements. 13 June 2019. https://www.hhs.gov/about/news/2019/06/13/hhs-labor-treasury-expand-access-quality-affordable-health-coverage.html. Accessed June 14, 2019