Future of Individual Coverage HRAs is Uncertain

In 2019, the Internal Revenue Service and U.S. Department of Labor published rules permitting employers to provide employer-sponsored health coverage by creating a special kind of health reimbursement arrangement (HRA). Called an Individual Coverage HRA, the rules allowed employers to provide health coverage by reimbursing employees for medical care expenses rather than enrolling them in a group health plan. The employee was required to enroll in individual health insurance (or Medicare) for each month the employee or family member was covered by the Individual Coverage HRA. The health insurance could be a plan offered on an Affordable Care Act health insurance exchange, or could be a plan not offered on an exchange as long as it was not a short-term, limited duration insurance policy or covered only dental, vision or similar benefits. Employers could offer Individual Coverage HRAs starting January 1, 2020. Many Trump-era rules are being revisited by federal agencies under the Biden administration. For Individual Coverage HRAs, there are groups lobbying for keeping the rule (such as the HRA Council formed by insurers and brokers) and groups such as Keep US Covered lobbying to rescind the rule.

American Rescue Plan Act provides subsidies for COBRA continuation coverage

The American Rescue Plan Act of 2021 (ARPA) was signed into law on March 11, 2021. One component of ARPA that has garnered a lot of attention is the expansion of subsidies for purchase of plans on the Affordable Care Act health care exchanges. A lesser known provision would provide subsidies for employees who lost their employer-provided health insurance due to an involuntary termination or reduction of hours. Subsidies will be available for up to six months.

Read more: American Rescue Plan Act provides subsidies for COBRA continuation coverage