President Trump wants to allow more people be able to purchase lower cost health plans. Most of the media has focused on plans to make it easier to purchase short-term plans and association health plans. However, a recent final rule is also making it easier to use pre-tax dollars to fund premiums for individual health insurance plans. This is done through an HRA-IIHIC. What is an HRA-IIHIC? Health Affairs explains:
…employers can provide an HRA that is integrated with individual health insurance coverage (HRA-IIHIC). This will allow employers to fund premiums for their employees in the individual market beginning in 2020. The rule also prohibits an employee who is offered an “affordable” HRA-IIHIC from being eligible for premium tax credits and authorizes a special enrollment period in
the individual market for those who gain
access to an HRA-IIHIC
Note that individuals who sign up for an HRA-IIHIC are not eligible for premium tax credits. The final rule also allows HRAs to fund other benefits.
…employers can offer new “excepted benefits HRAs.” These HRAs can be funded up to $1,800 and used to pay premiums for benefits such as limited vision and dental coverage that are excepted from many ACA requirements; short-term plans; and premiums for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
The White House estimates that by 2029, 11.4 million individuals will be enrolled in an HRA-IIHIC. Only time will tell if this new mechanism to help fund premiums will help or hurt the individual market.