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Executive Order Aims to Expand HRA

In dealing with Health Reimbursement Arrangements on a daily basis, BASE® is interested to learn where the proposed expansion of HRAs will lead.  Around since 1954, Health Reimbursement Arrangements have long been a viable option for affordable healthcare.

HRAs have continued to evolve, but the tax-advantaged plan operates on the principle of providing more flexibility and choice regarding employee healthcare when employers establish these account-based arrangements.

According to the White House website:

The order directs the Departments of the Treasury, Labor, and Health and Human Services to consider changes to Health Reimbursement Arrangements (HRAs) so employers can make better use of them for their employees.

  • HRAs are employer-funded accounts that reimburse employees for healthcare expenses, including deductibles and copayments. 
  • The IRS does not count funds contributed to an HRA as taxable income.
  • Expanded HRAs could potentially give American workers greater flexibility and control over how to finance their healthcare needs.

Implementing Change

None of the proposed changes would take effect immediately.  In fact, the Executive Order gives the Secretaries of the Treasury, Labor, and Health and Human Services 120 days just to propose new regulations or revised guidance.  These proposed regulations or revised guidance are just that, simply recommendations to increase the usability of HRAs, to expand employers’ ability to offer the tax-advantaged plan to employees.

The hope is to further simplify current regulations, while making HRAs even more helpful when it comes to covering the cost of healthcare.  In turn, the idea is that HRAs will only further expand the range of health care options.

Moving Forward

The Executive Order focuses on three main areas for improvement for the “near term”.  Meaning, things will remain status quo through the end of the year, due to the time it will take to propose regulations, and also taking into consideration the Secretaries will need to consider and evaluate public comments on the proposals.  

At the end of the day, BASE® is already offering a variety of HRAs to employers of all sizes to assist in financing their healthcare “to the extent permitted by law” and “supported by sound policy”.  We welcome the expansion, and the idea of further simplifying an already great resource for employers and their employees to make healthcare more affordable.

If you aren’t familiar with all of the HRA options currently available, call 1-888-386-9680 to learn how HRAs provide flexibility, choice, and affordability when it comes to healthcare.

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