January 2018

NASE Continues to Champion Reforms to Health Reimbursement Arrangements

Tuesday, January 30, 2018

In a letter to the Departments of Labor, Health and Human Services, the NASE provided comments in response to the Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States issued by President Trump on October 12, 2017. Section 4 of the Executive Order specifically addresses increasing availability of and access to the use of Health Reimbursement Arrangements (HRAs) for employers and their employees.

The letter strongly urged the Department of Treasury to reverse the Internal Revenue Service (IRS) Notice 2013-54 which wrongly subjected HRAs to the same rules as group health plans and discourages employers from providing this type of valued and valuable benefit to employees.

The previous administration ruled that HRAs are health plans subject to certain market rules established by the Affordable Care Act. Because HRAs do not meet these market rules, they trigger outrageous and unsustainable fines on the employers ($100 per day, per employee—totaling $36,500 over the course of the year) offering this type of financial assistance for health care costs to their employees.

In 2016, through provision 18001 of the 21st Century Cures Act, the law was amended to allow small businesses—those with fewer than 50 full-time employees—to offer an HRA without penalty if certain qualifications are met. This law is a necessary, but partial, legislative fix to an underlying regulatory problem.

The letter encourages the Department of Treasury to fix the underlying problem by reversing the original 2013 guidance issued through the IRS, and allow HRAs to be used more flexibly and by more businesses as was the case prior to the guidance.


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