Trump order expands employer ability to offer HRAs
President Donald Trump signed a Presidential Executive Order on October 12, 2017 with the goal of “promoting healthcare choice and competition across the United States.” The major directives of the order instruct departments of the executive branch to:
1. Facilitate the purchase of insurance across state lines;
2. Expand access to association health plans (“AHPs”);
3. Expand availability of short term, limited-duration insurance; and,
4. Expand availability and permitted use of Health Reimbursement Arrangements (“HRAs”).
In a statement at the signing ceremony, Trump said that this order directs the executive branch “to take action to increase competition, increase choice, and increase access to lower-priced, high-quality healthcare options.” The President has been promising action similar to that taken today since the Senate failed to vote on repeal and replace legislation in July.
Employees should be particularly attuned to the directives around HRAs. Under the Affordable Care Act and the Obama Administration, HRAs were effectively precluded from reimbursing insurance premiums by Department of Health and Human Services, Department of the Treasury, and Department of Labor regulations.
Congress had earlier acted to exempt certain small employers from this prohibition by creating Qualified Small Employer Health Reimbursement Accounts (“QSEHRAs”) as part of the 21st Century Cures Act. Trump’s order directs the relevant Secretaries to “to increase the usability of HRAs, to expand employers' ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.”
The White House has indicated that changes to HRAs will “expand employers’ ability to utilize HRAs to allow their employees to exercise greater choice and control over how to finance their healthcare needs, including through portable, more secure insurance coverage that they choose themselves.”
While the Executive Order does not direct particular actions, it is likely that HRAs will become an even more attractive option for employers to flexibly fund employee healthcare costs.