New HRA for excepted benefits, choice in health coverage — EBHRA
The new HRA for excepted benefits (EBHRA) provides tax-free reimbursements even if am employee refuses an employer’s traditional group health plan coverage. This gives employees more options in designing the health coverage that works best for them.
EBHRA — The new HRA for excepted benefits, choice in health coverage
When it comes to building a health benefits package, there is no one-size-fits-all. Employees want flexibility, and smart employers are making that possible.
Employers offering the new HRA for excepted benefits may soon provide employees with reimbursement of eligible medical expenses even when the employee has declined the employer’s traditional group health plan. This means more savings for both employer and employee when workers are able to design their own health benefit package.
Related: How the Excepted Benefit HRA works
What are excepted benefits?
An excepted benefit is a type of health coverage that does not provide comprehensive health coverage with the essential health benefits prescribed under the Affordable Care Act (ACA).
EBHRA reimbursements may include:
- Limited scope dental and vision insurance;
- COBRA continuation coverage;
- Short-term limited duration insurance (STDLI);
- Cost sharing (co-pays and deductible); and,
- Long-term care coverage, nursing home care, home healthcare, community-based care, or any combination thereof.
Read the entire final rule, posted on the Federal Register:
Health Reimbursement Arrangements and Other Account-Based Group Health Plans
EBHRA rules
The new EBHRA comes in response to presidential executive order 13813, Promoting Healthcare Choice and Competition Across the United States. President Trump announced the release of final rules on June 14, 2019.
Following are major points in the final rules:
Employer must offer a group health plan
The proposed EBHRA cannot be an “integral part of the plan.” As such, an employer must offer a traditional group health plan with essential health benefits to employees eligible to participate in the HRA; however, the employee does not have to take that insurance.
Employers cannot conditional eligibility on refusal of traditional group health plan
Only employees eligible for the group health plan may participate in the EBHRA but the employer may not require that an employee must refuse the group health plan in order to participate in the EBHRA.
Limited in amount
Since the HRA for excepted benefits will in itself be considered an excepted benefit, it must be limited in both scope and amount. The proposed limit for the 2020 plan year is $1,800. Also:
- The amount will be indexed for inflation, and,
- If the employer allows unused funds at the end of a plan year to rollover to the next, that amount will not be counted toward the annual limit in the new plan year.
Excepted benefits only
The EBHRA cannot reimburse premiums for individual health coverage or group health plan premiums (with an exception for COBRA continuation coverage).
Uniform availability
Participation must be available to all employees in a particular employee classification on the same terms including the same amount.
Compatibility with ICHRA
Since the EBHRA requires the employer to offer a group health plan to employees, and the Integrated Coverage HRA (ICHRA) does not allow an employer to offer a group health plan to employees offered an ICHRA, the two new HRAs are not compatible.
Dental, Vision & Other The new EBHRA pays premiums and related expenses for excepted benefits like dental and vision coverage. And, an employee can participate even if they decline participating in the employer’s group health plan. It’s all about having health coverage your way – the way that works best for your employees and your business. The Core EB-HRA Plan Document package is available
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