The United States government shifted regulations to allow Health Reimbursement Accounts (HRA) to pay for individual healthcare coverage. Under the final rules, an HRA can reimburse individual market premiums (and other 213(d) medical expenses if the employer chooses such a design). Under these individual coverage HRAs, participants, and any dependents, must actually be enrolled in individual health coverage (other than coverage that consists solely of excepted benefits). Employers must also substantiate compliance with this requirement. In addition, the rules address non-discrimination and describe when differences in HRA benefits are allowed. Additional notices to employees and an opt-out procedure are also required. The final rules provide that integration with individual market catastrophic plans, ‘grandfathered’ plans and ‘grandmothered’ plans is permissible.
In practice, for example, this change allows employers to offer the traditional employer sponsored group health plan to full-time employees, and offer an individual coverage HRA to seasonal employees.