Share

White House expands health accounts for small firms

Share

WASHINGTON (AP) — The Trump administration is expanding options for employers to use special accounts to help workers buy their own health insurance, upgrade job-based coverage, or choose low-cost plans with limited benefits, officials said Thursday.

The tax-free individual accounts are called “health reimbursement arrangements,” or HRAs, and starting next year employees will be able to use them to buy their own individual health insurance plans.

Employers that offer regular workplace coverage can also set up another type of HRA account — limited to $1,800 a year — that will allow workers to get additional benefits such as dental and vision care. This second type of account can also be used to purchase lower-cost, short-term insurance that comes with limited benefits and doesn’t have to cover pre-existing medical conditions.

HRAs are already available to employers and workers, but the administration finalized new rules that potentially could boost their popularity. Thursday’s final regulation is nearly 500 pages long, and will take time for experts and benefit consultants to parse. But critics fear that some of the changes could undermine traditional workplace insurance, or raise premiums for individual plans.

The White House says the expansion of HRAs is aimed at small to midsized businesses that struggle with cost of health insurance premiums. The administration estimates that eventually 800,000 employers and more than 11 million workers and family members will benefit.

Trending:
Federal Judge Has Bad News for Hunter Biden, Says There's Zero Evidence His Charges Are Politically Motivated

“This is going to create significant benefits for employers, particularly small employers, and millions of workers,” White House health policy adviser Brian Blase told reporters.

The HRA accounts join short-term health insurance and association health plans as the Trump administration’s answer to high health insurance premiums. The common thread in all three approaches is that they’re geared to making private coverage more affordable. But they don’t include the same levels of protections and benefits required by the Obama-era Affordable Care Act.

It’s unclear how much impact Trump’s combined policy changes will have. Association health plans are under a legal cloud after a federal judge struck down the regulation and the administration appealed. Solid estimates for enrollment in short-term insurance are not yet available.

Analyst Larry Levitt of the nonpartisan Kaiser Family Foundation said HRAs seem to offer a tempting opportunity for employers. Instead of struggling with premium increases year after year for a company-wide plan, they could put a fixed amount of money in employees’ accounts and let their workers buy their own coverage.

“With this new approach there is a potential for employers to shift to a defined contribution for health care, much like they have done for pensions with 401(k) plans,” he said. “But I don’t think that will happen on a large scale.” Employers would risk a backlash if their workers get rattled by a health care switch.

While any employer can set up HRAs, officials said they are designed with two types of companies in mind: small firms that are not required to offer health insurance and medium-sized firms that usually only offer their workers a single plan.

The Obama administration had disallowed using the tax-free accounts for workers to buy their own individual health insurance, and the Trump administration reversed that.

The money employers put in the accounts is tax-free to workers and tax-deductible for the company. Employees can’t put their own money into the accounts. Trump administration officials said the changes will bring more consumers into the individual health insurance market. Some employees might do the math and figure they’d come out ahead taking the money in the account and buying their own policies.

Some critics say HRAs could allow employers to come up with strategies for shifting workers with high health care costs off their company plans and into the market for individual policies, although the administration says it has acted to head that off.

Related:
Former MSNBC Host Chuck Todd Furious After Network Hires Former RNC Chair Ronna McDaniel

John Barkett, a regulatory expert with benefits consultant Willis Towers Watson said even if several million more customers sign up for individual health insurance plans, a large-scale exodus from employer-provided coverage seems unlikely.

“This is a brand new option for employers considering the best way to provide health insurance for their employees,” he said. “We don’t yet know if employees are going to value this option, or if employees are going to say, ‘I’d rather my employer take care of (health insurance) and I don’t want to shop for it myself.'”

The new accounts will start to become available next Jan. 1.

The Western Journal has not reviewed this Associated Press story prior to publication. Therefore, it may contain editorial bias or may in some other way not meet our normal editorial standards. It is provided to our readers as a service from The Western Journal.

Truth and Accuracy

Submit a Correction →



We are committed to truth and accuracy in all of our journalism. Read our editorial standards.

Tags:
Share
The Associated Press is an independent, not-for-profit news cooperative headquartered in New York City. Their teams in over 100 countries tell the world’s stories, from breaking news to investigative reporting. They provide content and services to help engage audiences worldwide, working with companies of all types, from broadcasters to brands. Photo credit: @AP on Twitter
The Associated Press was the first private sector organization in the U.S. to operate on a national scale. Over the past 170 years, they have been first to inform the world of many of history's most important moments, from the assassination of Abraham Lincoln and the bombing of Pearl Harbor to the fall of the Shah of Iran and the death of Pope John Paul.

Today, they operate in 263 locations in more than 100 countries relaying breaking news, covering war and conflict and producing enterprise reports that tell the world's stories.
Location
New York City




Conversation