Over one-third of employers not interested in providing employees with HRAs to help buy individual coverage

On October 12, President Donald Trump signed an executive order which directs the Departments of the Treasury, Labor, and HHS to consider changes to the regulations on health reimbursement arrangements (HRAs) so that employers could fund HRAs with tax-free dollars for employees to buy coverage in the individual market. According to a recent survey from Mercer, 34 percent of employers would not consider providing employees with these kinds of HRAs.

An HRA is a type of tax-advantaged, account-based employer-funded health insurance plan that reimburses employees for qualified medical expenses, and an HRA is considered a group health plan. It is not the same as a flexible spending account (FSA) or a health savings account (HSA), which are not group health plans. Section 18001 of the 21st Century Cures Act (P.L. 114-255) created a new type of HRA—the Qualified Small Employer HRA—allowing small employers that don’t sponsor a group health plan to fund stand-alone HRAs for employees who buy nongroup health insurance coverage on the ACA’s marketplace. The Executive Order would have the Departments consider possibly allowing expansion of such arrangements.

In March, Mercer’s survey of 750 benefit professionals asked employers of all sizes whether they would consider this option as a way to provide coverage for some or all of their employees. While over one-third would not consider this option, 16 percent of employers said they would consider it for all eligible employees, and 8 percent would consider it for part-time or another subset of employees. In addition, 42 percent would consider implementing this option, depending on whether adequate funding is allowed, and another 21 percent would consider implementing this option, depending on the strength of the individual market.

Mercer also found that smaller employers were the most likely to say they would consider this option for all employees—23 percent of those with fewer than 500 employees, compared to 10 percent of those with 5,000 or more.

SOURCE: www.mercer.com
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