New Ruling on HRAs

by WEX Health

Last week, the U.S. departments of Health and Human Services, Labor and the Treasury issued a final ruling allowing employers of all sizes that do not offer a group coverage plan to fund a new kind of health reimbursement arrangement, HRA, known as the individual coverage HRA (ICHRA).

Effective January 1, 2020, employees will be able to use their employer-funded ICHRA to buy individual-market insurance, including public exchanges formed under the Affordable Care Act (ACA). The ICHRA funds are eligible for premiums only.

This allows employers to have greater flexibility in how they offer health benefits. An important provision of the final regulation is the ability for an employer to offer the benefit it deems best fits its needs (either traditional group health or a premium HRA) to different classes of employees so long as all employees in a particular class are offered the same type of benefit.

Another important provision of the final regulation is clarification that HSA-qualified health insurance purchased with funds from an ICHRA is HSA-compatible. WEX was among the first to push for this important clarification and we appreciate that the agencies were responsive to industry comment.

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