Alert / Employee Benefits
Trump administration creates two new types of HRAs

Trump administration creates two new types of HRAs … but when is the juice worth the squeeze?

Federal officials have finalized regulations creating two new types of health reimbursement arrangements (HRAs), opening the door for more employers to use an HRA to reimburse employees for premium expenses for individual health insurance policies in lieu of group medical insurance. The rules thus invite employers to consider a pure “defined contribution” approach to medical insurance for their employees.

But the new rules add such complexity to the HRA landscape that many employers, even those willing to consider an HRA to defray individual market premium costs, may find the rules too difficult to embrace. For example, employers subject to the ACA employer mandate will find that ensuring the HRA benefit is adequate to render individual market coverage “affordable” to an employee is a complex, employee-by-employee calculation necessitating information about coverage costs in specific areas.

Still, for some employers with certain categories of employees the rules might be attractive. Employers with large populations of part-time, seasonal or temporary employees, for example, can use an HRA to help these employees buy individual policies on a tax-favored basis.

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