Author: Laura Saunders
A landmark change will soon give more American workers control over their health-care coverage, but be warned: There are pitfalls.
Beginning Jan. 1, 2020, companies can provide employees with tax-free dollars to purchase an individual policy rather than offer them a traditional group-health plan. The Trump administration laid out the final rules for the so-called Health Reimbursement Arrangements, or HRAs, just this month.
The new rules for HRAs revive a health-insurance option often used by smaller businesses until the Obama administration said the Affordable Care Act, or ACA, disallowed it. In 2016 Congress reinstated HRAs for firms with fewer than 50 employees, but certain limits lessened their appeal.
Now companies of all sizes can provide employees with dollars to buy their own policies. As long as those dollars are used for ACA-approved coverage, no income or payroll taxes are due. There are no monetary limits on the companies’ payments, if they meet certain guidelines.
Firms can offer only a traditional group-health plan or an HRA to the same group of workers—not both. For this reason, large companies aren’t expected to rush in.
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