Personal and Portable Health Insurance Hits Workplace Just in Time

With millions of people losing jobs or dealing with pay cuts from the pandemic shutdowns, a workplace health care option recently expanded by the Trump administration is getting renewed attention because of its flexibility and portability.

Health reimbursement arrangements (HRAs) are employer-funded accounts that set aside pre-tax money for employees to use for out-of-pocket medical expenses and personal health insurance premiums. The new rules for HRAs went into effect on January 1, just weeks before many businesses shut down in response to the pandemic crisis.

In some cases, laid-off employees with an “excepted benefit HRA” would be able to tap into these accounts to continue their health insurance while out of the workforce. Without an HRA, the employee would probably have to go without, enroll in Medicaid, or opt to continue employer health insurance under COBRA at a cost of hundreds of dollars each month (see article, page 8).

An HRA can provide an employee with funds to purchase a short-term, limited duration health insurance plan. Those plans are generally much cheaper than COBRA or what can be purchased on the individual insurance exchanges, because they don’t have to include expensive Obamacare-mandated items.

‘Potential to Revolutionize’

On January 29, Centers for Medicare and Medicaid (CMS) Administrator Seema Verma addressed participants at a CMS Health Care Innovation event in which she stated a common thread of health care challenges is cost and affordability.

“HRAs hold the potential to revolutionize the health insurance market,” Verma told the group. HRAs could double the size of the individual market and create stability for years to come, Verma said.

By 2029, 8,000 employers will cover 11 million employees with HRAs, according to the Trump administration, increasing by 800,000 the number of Americans insured. HRAs were created in 2002, but the Obama administration discouraged their use by imposing a $100 per day fine for each employee, according to the Goodman Institute for Public Policy Research, which co-publishes Health Care News.

“With Obamacare came regulations and threats of steep employer fines that effectively deep-sixed this option,” wrote Goodman Institute President John Goodman and Marie Fishpaw, director of domestic-policy studies at The Heritage Foundation, in their August 15, 2019 paper, “A Health Plan for President Trump.”

Catching On

According to a discussion at an industry panel at the CMS event, a recent survey showed 70 percent of small businesses didn’t know what an HRA was. Just 29 days after the new HRA rules went into effect, some 200 employers had begun using them.

“We always said that small businesses would find the most value in offering the individual coverage health reimbursement arrangement (ICHRA),” said William Sweetnam, legislative and technical director for the Employers Council on Flexible Compensation. “By offering an ICHRA, they would be providing a benefit that would help them attract and retain a better workforce.”

Before the pandemic shutdowns caused a rapid spike in unemployment, HRAs were a recruitment tool for employers hiring temporary, part-time, or seasonal workers, says Sweetnam. “ICHRAs will remain a valuable option for employers in attracting and retaining employees.”

The interest in HRAs is here to stay, says Sweetnam.

“The pandemic has shown the value of having health care coverage and the perils of having employer-provided coverage, if you lose your job,” said Sweetnam. “The pandemic will cause people to see the value of health insurance, and the ICHRA is another method of getting coverage.”

Ashley Bateman (bateman.ae@googlemail.com) writes from Alexandria, Virginia.