This past week the Department of Labor (DOL), Treasury Department and Department of Health and Human Services (HHS) have jointly released proposed regulations which will expand the use of health reimbursement arrangements (HRAs) by employers.
HRAs allow employers to reimburse their employees for medical expenses in a tax-favored way. With the enactment of the Affordable Care Act (ACA), limits were placed on the use of HRAs by employers due to the ACA’s prohibition of annual and lifetime limits on benefits and the requirement of cost-free preventive services. HRAs that were integrated with the employer’s group health coverage were permitted under the ACA but HRAs could not be integrated with individual health insurance coverage. Retiree only plans and excepted benefits were exempt from the ACA HRA rules.