Talking Points Summarizing the 500-page HRA Rule
- HRA money can be used to pay for HSA qualified health plan premiums, and dental and vision expenses but cannot for HSA contributions. There is no prohibition on employers making separate deposits into an HSA the employee opens if they have an HSA qualified plan paid for by HRA funds.
- The HRA benefit is tax-free for the employer and employee just like employer-provided health care, and the employer can only use a 125 plan if it is off-exchange. The WH expects most employers to use the HRA benefit off-exchange. Employers cannot offer the 125 on exchange.
- The excepted benefit HRA will be for the 27% of employees who turn down an employer traditional group plan, is limited to $1,800. It can be used to buy a Short Term Limited duration plan, but not an Association Health Plan.
- Unlike the excepted benefit HRA, there is no dollar cap under the individual benefit HRA but can only be used to buy individual plans.
- The individual benefit HRA can be used to buy Association Health Plans.
- Individual HRA benefit allows working seniors to spend HRA funds on any Medicare premiums.
- This rule is widely seen as a pivot to direct contributions, just like the move to 401 ks moved Americans away from traditional pensions.
- 80% of employers now offer one choice of a health plan. The WH sees this rule to allow more employees more choice, with tax-free dollars.
- Treasury and IRS have a DRAFT proposed rule on 213(d) modernization they are looking at, and are considering adding Direct Primary Care and Health Care Sharing Ministries as a qualified medical expense. On-site clinics, preventative and chronic care questions, and telemedicine will likely also be addressed. Removing abortion from 213 (d) would be “extremely challenging,” and right now, there is “no effort underway” in that regard. The release date of the draft 213 (d) modernization rule is TBD.