Download our on-demand webinar to learn: What HRAs are available today? How will the Departments’ proposed regulations change options for 2020? How to help clients evaluate their options.

1. New HRAs on the horizon:
6 small business options
01 / 20
New HRAs on the horizon webinar 20190507 V3.R1

2. Caitlin Bronson, PeopleKeep Content Writer
A professional communicator in the insurance space, Caitlin has worked
with brokers, agencies, and financial advisors to navigate health care
reform and other policy changes.
You can find her contributions at www.peoplekeep.com/resources.
About the presenter
02 / 20
New HRAs on the horizon webinar 20190507 V3.R1

3. Our story
PeopleKeep helps small businesses offer competitive
benefits at a price they can afford. Personalized benefits
automation software from PeopleKeep allows businesses
to manage their benefits in minutes per month.
PeopleKeep automates benefits compliance and employee
support. Employees receive tax-advantaged
reimbursements to pay for health insurance and other
medical, dental, and vision expenses. Today more than
3,000 companies across the United States trust PeopleKeep
to automate their benefits and keep employees happy.
PeopleKeep is based in Salt Lake City, Utah.
03 / 20
New HRAs on the horizon webinar 20190507 V3.R1

4. Agenda
HRA options for 2019
Proposed regulations and changes for 2020
How evaluate your benefits options
HRAs: a brief history
Q&A
What is an HRA?1
2
3
4
5
6
04 / 20
New HRAs on the horizon webinar 20190507 V3.R1

5. What is an HRA?
A quick reminder
All HRAs follow a basic three-step process.
1. Business offers a monthly allowance.
This represents the maximum amount businesses will
pay to employees that month.
2. Employees purchase health care.
Depending on the HRA, this may include individual
health insurance.
3. Business reimburses employees.
After reviewing employee documentation, the
business reimburses employees tax-free up to their
allowance amount.
05 / 20
New HRAs on the horizon webinar 20190507 V3.R1

6. Health reimbursement arrangements (HRAs): a history
Where did the HRA come from and why?
HRAs aren’t new.
1961 IRC Section 106 allows an employer to reimburse employees’ medical expenses
tax-free, including insurance premiums.
1974 ERISA introduces the group HRA.
2002 IRS Notice 2002-45 introduces the stand-alone HRA.
06 / 20
New HRAs on the horizon webinar 20190507 V3.R1

7. HRAs: a history
The stand-alone HRA: how it worked
The stand-alone HRA was available to businesses of all sizes and allowed them
to decide:
1. Employee eligibility criteria.
2. The amount of employees’ HRA allowances, with no minimum or
maximum contribution amounts.
3. Whether to offer different allowance amounts to different employees.
4. What types of medical expenses to reimburse.
07 / 20
New HRAs on the horizon webinar 20190507 V3.R1

8. HRAs: a history
The ACA and IRS Notice 2013-54: a temporary slowdown for HRAs
IRS Notice 2013-54 said HRAs must
comply with Affordable Care Act’s
“market reforms.”
The result?
No more stand-alone HRA, except for
companies with one W-2 employee.
1961 IRC Section 106 allows an employer to
reimburse employees’ medical expenses
tax-free, including insurance premiums.
1974 ERISA introduces the group HRA.
2002 IRS Notice 2002-45 introduces the
stand-alone HRA.
2010 Affordable Care Act passes.
2013 IRS Notice 2013-54 limits HRAs to
three compliant options.
08 / 20
New HRAs on the horizon webinar 20190507 V3.R1

9. HRAs: a history
Three compliant HRAs remaining
From 2014 to 2016, only three HRAs were compliant:
1. The group-coverage HRA
2. The one-person stand-alone HRA
3. The retiree HRA
09 / 20
New HRAs on the horizon webinar 20190507 V3.R1

10. A new HRA in 2016
The qualified small employer HRA (QSEHRA)
The 21st Century Cures Act created a new HRA for businesses with fewer than 50 employees.
1961 IRC Section 106 allows an employer to reimburse employees’ medical expenses
tax-free, including insurance premiums.
1974 ERISA introduces the group HRA.
2002 IRS Notice 2002-45 introduces the stand-alone HRA.
2010 Affordable Care Act passes.
2013 IRS Notice 2013-54 limits HRAs to three compliant options.
2016 21st Century Cures Act creates the QSEHRA.
10 / 20
New HRAs on the horizon webinar 20190507 V3.R1

11. What’s available in 2019?
The qualified small employer HRA (QSEHRA)
1. Business offers a monthly allowance. No minimum contribution requirements,
but allowance amounts are capped at $5,150 for single employees and $10,450 for
employees with a family.
2. Employees purchase health care. All items listed in IRS Publication 502, including
individual health insurance premiums, are reimbursable through the QSEHRA.
3. Business reimburses employees. QSEHRA reimbursements are free of payroll
tax. They may be free of income tax if employees are covered by minimum essential
coverage (MEC).
11 / 20
New HRAs on the horizon webinar 20190507 V3.R1

12. 12 / 20
PROS
● Only HRA available to businesses wanting to
offer a benefit to multiple current employees
without group health insurance
● Gives small businesses freedom to control
their benefits budget
● Provides value to employees regardless of
their insurance status
What’s available in 2019?
The qualified small employer HRA (QSEHRA)
CONS
● Only available to small businesses with fewer
than 50 full-time employees
● Limited freedom in crafting eligibility
requirements and choosing allowance
amounts
● Annual allowance caps
● Premium tax credit coordination
New HRAs on the horizon webinar 20190507 V3.R1

13. Proposed regulations and changes for 2020
Executive Order 13813 and other proposals
October 2018 federal government regulations propose creating two new HRAs:
the excepted-benefit HRA and the individual-coverage HRA (ICHRA).
1961 IRC Section 106 allows an employer to reimburse employees’ medical expenses tax-free, including
insurance premiums.
1974 ERISA introduces the group HRA.
2002 IRS Notice 2002-45 introduces the stand-alone HRA.
2010 Affordable Care Act passes.
2013 IRS Notice 2013-54 limits HRAs to three compliant options.
2016 21st Century Cures Act creates the QSEHRA.
2018 Federal regulations propose two new HRAs and allowing special enrollment periods for three HRAs.
2020 The ICHRA, the excepted-benefit HRA, and new SEPs go into effect.
13 / 20
New HRAs on the horizon webinar 20190507 V3.R1

14. Proposed regulations and changes for 2020
The excepted-benefit HRA
Group-coverage HRA Excepted-benefit HRA
Group coverage requirements The business must offer group
health insurance, and employees
must enroll in the policy to
participate.
The business must offer group
health insurance, but employees
don’t have to enroll to participate.
Annual contribution limits None. $1,800 per employee.
Eligible expenses Expenses listed in IRS Publication
502, apart from health insurance
premiums.
Excepted benefits only.
14 / 20
New HRAs on the horizon webinar 20190507 V3.R1

15. Proposed regulations and changes for 2020
The individual-coverage HRA (ICHRA)
1. Business offers a monthly allowance. Businesses can alter eligibility by nine
employee classes. No minimum contribution requirements or maximum allowance caps,
and businesses can alter monthly allowances by employee class.
2. Employees purchase health care. All items listed in IRS Publication 502, including
individual health insurance premiums, are reimbursable through the ICHRA.
3. Business reimburses employees. ICHRA reimbursements are free of payroll tax
and income tax.
15 / 20
New HRAs on the horizon webinar 20190507 V3.R1

16. 16 / 20
PROS
● Available to businesses of all sizes.
● No allowance limits.
● Businesses can decide eligibility and
allowance amounts based on nine employee
classes.
● Employees can choose between premium tax
credits and the HRA.
CONS
● Only employees with individual health
insurance can participate.
Proposed regulations and changes for 2020
The individual-coverage HRA (ICHRA)
New HRAs on the horizon webinar 20190507 V3.R1

17. Proposed regulations and changes for 2020
The individual-coverage HRA (ICHRA)
Stand-alone HRA
2002–2013
QSEHRA
2016 onward
ICHRA
2020 onward
Business size requirements None. Fewer than 50 FTE employees. None.
Employee eligibility guidelines Eligibility requirements can’t be
discriminatory.
All full-time employees are
automatically eligible.
Employers can decide based on 9
employee classes.
Allowance guidelines None. $5,150 for single employees;
$10,450 for employees with a
family.
Employers can offer different
allowance amounts based on 9
employee classes.
Group health policy requirements None. Can’t offer with a group policy. Employees can’t have a choice
between group and the ICHRA.
Premium tax credit requirements PTC applied first. PTC reduced by QSEHRA
allowance.
Employees must choose between
PTC and ICHRA.
17 / 20
New HRAs on the horizon webinar 20190507 V3.R1

18. What’s next for proposed HRA regulations
The ICHRA and the excepted benefit HRA
1. Departments consider feedback from commentary period.
2. Departments issue final rule (expected 2019).
3. Regulations go into effect (expected 2020).
18 / 20
New HRAs on the horizon webinar 20190507 V3.R1

19. Evaluating
your
options
19 / 20
New HRAs on the horizon webinar 20190507 V3.R1

20. Thank you for attending today’s
webinar!
20 / 20
New HRAs on the horizon webinar 20190507 V3.R1