The White House has been busy these past few weeks, writing regulations that will significantly impact healthcare. The most important rule will upend the use of Health Reimbursement Arrangements (HRAs) by employers. For plan years that start on or after January 1, 2020, HRAs will be a lot more flexible. Reversing policy established by the Obama administration, HRAs would be permitted to be used to fund individual coverage purchased by employees. The employer contribution would be tax-free to the employee and tax-deductible to the employer. Significantly, this benefit can be discriminatory by employee class (I guess the 105(h) rules we were all worried about won’t be the obstacle we thought they might be). In other words, using an insured plan or an HRA, employers will be able to provide a richer benefit for executives and key employees. This rule would also allow an employer to provide a tax-free stipend to purchase short-term health plans.
The White House also released its new healthcare transparency policy. This one is not as impactful. While it has laid out several broad-reaching objectives, the rule turns back to the U.S. Department of Health and Human Services (HHS) to write specifics in carrying these out. In general, hospitals and other providers will be required to disclose out-of-pocket costs prior to rendering services. HHS has been charged to find ways to improve analytics to assess practices which will reduce the cost of care. And perhaps the most important and meaningful part of this executive order directs HHS to find ways to use HSA funds for direct primary care arrangements and to allow for the carryover of unused FSA funds. However, the rule will only be as impactful as the final regulations promulgated by HHS and we are a long way from those being released, much less becoming effective.
I think employers should be thoughtful in reacting to any of these executive orders. With several sweeps of a pen, the President has undone a lot of the policy which employers have complied with in shaping their benefit plans. As I watched the Democratic debate last night and listened to the radical healthcare change being advocated, I thought: hold on tight employers – the roller coaster is going to get bumpy.