Executive Order Addresses HRAs

Posted by BAS - 19 October, 2017

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President Trump issued an Executive Order on October 12, 2017 entitled Promoting Healthcare Choice and Competition Across the United States.  The Order addresses three topics, but employers may be most interested in the potential changes to Health Reimbursement Accounts.

The Order encourages expanded availability of HRAs and the ability to use HRAs to reimburse additional expenses. It directs the Departments of Treasury, Labor and Health and Human Services to propose regulations or revise guidance to “increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.”

An HRA is an employer-funded group health plan that allows participating employees to be reimbursed tax-free for qualified medical expenses up to a certain dollar amount each year. The employer funds and owns the account. Employees cannot contribute to their HRAs, and amounts in the HRA must be used for medical expenses, only. Employers set the terms of their HRA programs. Some allow for amounts to be carried over from year to year and others implement a use-it-or-lose-it feature.

Presently, HRAs may not be used to reimburse the cost of insurance premiums. The Executive Order seems to promote a change to this rule, and after new rules are issued addressing HRAs, employers may find implementing HRAs a valuable benefit for employees.

Topics: Health Reimbursement Accounts


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