The Trump Administration’s rule expanding health reimbursement arrangements (HRAs), specifically allowing employers to reimburse employee’s individual market premiums under certain conditions, is a significant step to empower American families with greater choice and control of their health insurance. These individual coverage HRAs (ICHRAs) are already being used by hundreds of employers to offer coverage to tens of thousands of employees.
The Treasury Department modeled the effect of the rule and expects that in about five years, 800,000 employers will offer the ICHRA and more than 11 million individual market enrollees will be receive coverage through the ICHRA. This rule change should add far more people to the individual market with a much lower budgetary cost than the Affordable Care Act (ACA).
Employers and benefit consultants working to help employers establish ICHRAs have identified several obstacles to offering the ICHRA. One concern is that the individual market overwhelmingly consists of expensive plans that cover few providers in many areas of the country. It will take Congressional action, particularly loosening some of the ACA rules that keep average premiums high to meaningfully improve the market. However, the main operational obstacle to ICHRA adoption thus far—a requirement to provide a written notice of the ICHRA at least 90 days before the start of the plan year—can be remedied by the administration now. The 90-day notice period makes it difficult for employers to adopt the ICHRA, reduces health care choices, and means that more people are uninsured as a result. The notice period should be cut in half.
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