A finalized rule unveiled last week by the Trump Administration could help make coverage both more portable and affordable and increase choices for consumers.
The new rule deals with Health Reimbursement Arrangements or HRAs, which are employer-funded accounts that workers use to pay for health insurance premiums or medical expenses.
This rule will allow employers to offer HRAs to their employees in lieu of a company sponsored plan. These plans would allow an employee to take their coverage with them rather than the plan being owned by their employer and leftover funds would roll over from year to year.
According to the Department of Health and Human Services, the expansion of HRAs would benefit approximately 800,000 employers and 11 million employees and family members, including an estimated 800,000 who were previously uninsured.
It would also free small businesses from the complexity of having to manage a company-provided plan for its employees.
“Too many Americans today have little say in how their healthcare is financed,” said HHS Secretary Alex Azar in a statement. “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.
“This rule and other administration efforts are projected to provide almost 2 million more Americans with health insurance.”
White House economist Brian Blase told reporters on a conference call that the vast majority of expansion under the new rule will be on plans that are not part of the Affordable Care Act’s plan exchanges. He also said that the new rule will require employers to either offer a sponsored plan or migrate to the HRA model.
Under the new rule which takes effect on January 2020, companies can replace their sponsored plans with the HRAs to allow their employees to purchase in the individual market. Employee and employer contributions to HRAs are without tax penalties when it comes to both income and payroll taxes, like employer-sponsored health plans.
According to the HHS, 80 percent of employers that provide coverage only offer one plan.
In 2017, President Trump issued an executive order that says the administration will prioritize three areas for improvement: Association Health Plans, short-term, limited duration insurance and HRAs.
Short-term insurance plans are ones that aren’t compliant with the massive tome of rules and regulations that made Affordable Care Act plans unaffordable to many consumers and the Trump administration’s rule allowed more customers to
The other rule allowed small businesses to join Association Health plans and receive savings through economies of scale once only limited to large companies.