General InfoHealth

The Basics of the 2020 Individual Coverage Health Reimbursement Arrangements (HRA)

A new product is available for 2020 in the Marketplace and there’s a lot to learn about the ins and outs of this new Health Reimbursement (HRA) Arrangement.  A HRA is a type of account-based health plan that employers can use to reimburse their employees for medical expenses.  The key is to have a basic knowledge of the new HRA’s so you can make informed decisions as you navigate your health care options for 2020.

What is the Basic Info on the HRA Plans?

Over the summer of 2019, the US Departments of Health and Human Services, Labor and Treasury issued new rules on HRAs. As of January 1, 2020, the new regulations could transform how employers pay for their employees’ health care coverage. The recent rulings will allow employers of all sizes that do not offer a group coverage plan to fund a new kind of Health Reimbursement Arrangement.  ICHRA is the new HRA arrangement for individual coverage.

Starting January 1, 2020, employees will be able to use these ICHRA’s to buy individual market health insurance. Also, this includes including health insurance that is purchased on public exchanges. This insurance is a result of that that were formation of the Affordable Care Act (ACA).

What are the Benefits of the ICHRA plans?
  • Employers can provide their employees and the employee families with tax preferred funds to pay a percentage of the cost of health coverage for purchasing health plans in the individual market.
  • Approximately 800,000 employers will offer individual coverage HRAs to almost 11 million employees. Therefore, large population of employees will have more options for health insurance coverage.
  • Smaller US employers will especially benefit from these new options. They will be able to offer more insurance options to employees.  As a result, this will allow them to compete with larger corporations that have more extensive health insurance packages.
  • Employers will have flexibility in how to structure their offerings with the ICHRAS.

Bottom line:  Workers can use individual coverage HRA’s to purchase their own health plans through the Marketplace. Through this system, employer’s pretax dollars to subsidize their employees premiums in the Health Insurance marketplace.