The Departments of Treasury, Labor, and Health and Human Services have jointly issued final regulations (the Final Regulations) providing employers with greater flexibility in offering health reimbursement arrangements (HRAs) to employees. Specifically, employers will be able to offer employees an HRA that integrates with individual health insurance coverage, known as an Individual Coverage HRA. As a result, these Final Regulations, in essence, enable employers to offer HRAs in lieu of a traditional group health plan to their employees. Additionally, the Final Regulations set forth conditions under which another type of HRA can be offered to employees who do not elect to participate in the employer’s health plan, known as an Excepted Benefit HRA.
The Final Regulations include a few changes from the proposed regulations issued on October 29, 2018, including additional guidance on the available employee classifications that an employer may use when offering an Individual Coverage HRA to its employees.
The Final Regulations generally apply for plan years beginning on and after January 1, 2020.