Employers Can Fund Workers’ Individual Plans Under New Rule

More employers will be able to give workers cash in lieu of health insurance because of a rule change that takes effect at the start of 2020. As of Jan 1, any employer can give employees pretax compensation to buy an individual policy instead of a company-sponsored plan, via a health reimbursement arrangement.

On June 13, the U.S. departments of Health and Human Services, Labor and the Treasury issued a final rule allowing employers of all sizes that do not offer a group coverage plan to fund a new kind of health reimbursement arrangement (HRA), known as an individual coverage HRA (ICHRA). The departments also posted FAQs on the new rule.

For more comprehensive information on the new rule, SHRM has a resource guide here: New Final Rule Lets Employees Use HRAs to Buy Health Insurance