Two Problems: Millions of workers in the United States lack health insurance coverage, often because their employers don’t offer it.
Hundreds of thousands of businesses, mostly smaller ones, would like to offer healthcare benefits to employees but can’t because of the high cost and/or lack of options.
What would you say if we told you that new legislation could provide an answers for both of these issues?
The Potential Solution: On June 13, 2019, the departments of Labor, the Treasury, and Health and Human Services released news of a new rule, allowing employers of all sizes to offer ICRHA (Individual Coverage Health Reimbursement Arrangement). Under this type of plan, employers can contribute funds to a Health Reimbursement Arrangement, while enjoying certain tax benefits. Employees can then use the funds within these accounts to purchase their own health insurance plans, including those offered on state exchanges formed by the Affordable Care Act (or the federal exchange, where state exchanges are not available).
Benefits for employers. Once the new rules go into effect, it is estimated that 800,000 employers will offer this form of healthcare coverage to more than 11 millions workers and their families. Most of those employers will be those with 20 or fewer workers, allowing small companies to better compete in the labor market.
Benefits for employees. The ICRHA policy will allow employees to shop around and select their own health insurance plan. Workers and their families will attain greater control over their healthcare plan options, by selecting a provider and plan that suit their specific needs.
Tax benefits. With an HRA, employers contribute pre-tax dollars to a fund, which can then be used for healthcare expenses. Until now, those funds extended only to expenses uncovered by a health insurance plan. Now, under the new rule, those funds can be used to pay for health insurance premiums if the employee purchases their own plan.
An HRA differs from an HSA (Health Savings Account), in that HSA funds stay with the employee when employment status changes. With an HRA, unused funds go back to the employer in the event the worker is fired, laid off, or quits.
This new provision is exciting, as it potentially allows for millions of uncovered Americans to gain health insurance. Meanwhile, it also benefits employers (particularly smaller companies). But of course, the new ICHRA rules are complex and require the guidance of an insurance professional. Give us a call to learn more, and we will show you the numerous ways in which ICHRA can benefit both your company and your employees.