A federal health insurance initiative that could ultimately impact as many as 800,000 employers and 11 million employees across the country has just been announced.
New regulations set to take effect next January will allow for an expanded use of what are known as Health Reimbursement Arrangements, or HRAs.
The regulations are being issued jointly through the departments of Health and Human Services; Labor, and Treasury, and would allow for greater flexibility in the kind of coverage employees purchase on their own.
The new policy, said Labor Secretary Alexander Acosta in a statement, “offers millions of American worker more health coverage choices and portability.”
Acosta added that a wider use of HRAs could “create a great opportunity for job creators to support their employees and for those employees to be empowered to make the best healthcare decisions for their families.”
In its essence, the new policy will allow employers to use HRAs to provide their workers with tax-preferred funds to pay for health insurance coverage. That means that workers who purchase an individual plan via an HRA will receive the same tax advantage as workers with traditional employee-sponsored coverage.
The idea, according to a Labor Department release, is to give workers “greater control over their healthcare by providing an additional way for employers to finance health insurance.”
The new policy is especially intended to help small businesses, many of which in recent years have curtailed offering any kind of coverage for their employees.
Just as often, employers who have continued to pay for some kind of coverage have done so by only offering their employees one type of health plan.
According to federal statistics, some 81 percent of small to mid-sized companies with fewer than 200 employees have typically offered benefits provided through only one plan, with 42 percent of larger companies doing the same.
Writing in the Washington Post, Avik Roy, the president of the Foundation for Research on Equal Opportunity, suggested that the new HRA policy “has the potential to revolutionize the private health insurance market.”
While somewhat critical of the new plan, the Washington-based American Action Forum said the new HRA rules will “give employers and employees more health care options, which could lead to potential increases in the number of insured individuals.”
Despite those mainly positive reviews, the publication Medical Daily is warning that employers may try to “incentivize employees with health conditions to accept the HRA and move away from a group health plan and into the individual market.”
By so doing, many employers could essentially discard “high-risk employees into the individual market through an HRA in order to slash their own group health plans.”
By Garry Boulard
