The Individual Coverage HRA that is expected to roll out in January of 2020 provides a great deal of new flexibility financially as well as administratively. There are now classes of employees that will have access to your company’s HRA plan that currently don’t. There is also an ability to offer different benefits to different classes that wasn’t there before.
This flexibility will help numerous employees pay for their health coverage as well as increase your company’s marketability.
Currently, QSEHRA plans must offer the same benefits to all employees, despite under what class they may fall. Benefits may differ based on an employee’s age or whether they have single or family coverage. Where the employer gets boxed in is what they can offer based on class. The employer must extend these benefits to full-time employees but can choose to exclude part-time and seasonal employees, those who have worked less than 90 days, and those under the age of 25 if they choose.
An example of why an employer may choose to exclude these employees is because they are forced to extend the same benefits to all employees, whether they work full time or not and this may not make financial sense for the company. This lack of freedom to offer different benefits to different classes results in certain employees losing out on benefits altogether.
ICHRA will include the same classes as QSEHRA, but with a few new ones to provide even more flexibility. The ICHRA classes are as follows:
- Full-time employees
- Part-time employees
- Seasonal employees
- Employees covered under a collective bargaining agreement
- Employees in a waiting period
- Employees under age 25
- Foreign employees who work abroad
- Employees in different locations, based on rating areas
- A combination of two or more of the above
In addition to some of the proposed classes listed, such as those covered under a collective bargaining agreement, the employer will now be able to offer different benefits to each class. As an example, you may choose to offer a traditional group plan to full-time employers, but an ICHRA to part-time and seasonal employees. Also, you may adjust the reimbursement rates by geographical location of each office, based on the different rating criteria.
We are just as excited as you are to find out what will happen with these proposed HRAs now that the comments period has closed. The Departments of Treasury, Labor, and Health and Human Services requested for commentary on their proposed regulations and Take Command Health responded with our own comprehensive and exclusive research. We believe this research could help set up this new generation of HRAs for success. We’re busy tracking these changes carefully and will report back so we can share how these will help our small business clients. Stay tuned!