Trump administration finalizes plan to expand HRAs 

Health insurance form payer plan enroll
Trump administration officials have finalized a rule that would expand health reimbursement arrangements. (Valeriya/Getty)

The Trump administration has finalized a plan that would expand employers’ ability to offer health reimbursement arrangements (HRAs) to employees. 

The departments of Health and Human Services (HHS), Labor and Treasury first proposed the joint rule in October, which would reconfigure Obama-era regulations that limited employers’ use of HRAs beginning in January 2020. Under an HRA, employers would pay a stipend to allow employees to purchase coverage on the individual markets. 

Brian Blase, special assistant to the president for economic policy, said on a call with reporters Thursday evening that the rule was designed with “common-sense guardrails” to allow for greater employer flexibility while avoiding adverse selection in the individual markets. 

Blase said White House officials estimate that the size of the individual markets could increase by 50% as a result of the rule. Joe Grogan, assistant to the president and director of the Domestic Policy Council, said on the call that approximately 800,000 employers are expected to take advantage of HRAs under the rule. 

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Under the rule, employers who offer HRA benefits would be allowed the same tax exemptions that current group plan premiums enjoy, the officials said. The rule is the final dangling thread from a 2017 executive order that directed federal agencies to find ways to increase choice in the individual markets, they said. 

“Here’s the main takeaway: The rule will provide hundreds of thousands of businesses a better way to offer health coverage,” Grogan said. 

Employers will also have the option to launch an excepted benefit HRA, according to the rule. Under this model, employers can offer an HRA of up to $1,800 per year alongside traditional group insurance plans, providing an alternative for employees who may not be able to afford the health plan premiums. 

In a statement, HHS Secretary Alex Azar said that the Trump administration projects that the rule would lead to an additional two million people gaining insurance coverage. 

“Too many Americans today have too little say in how their healthcare is financed,” Azar said. “President Trump has promised Americans that he will put them in control of their healthcare, and this expansion of health reimbursement arrangements will help deliver on that promise by providing Americans with more options that better meet their needs.” 

Trump administration officials expect the rule to be especially beneficial for small employers with fewer than 50 staffers.