Momentum - Business to Business Online Magazine MOMENTUM November 2019 | Page 18

T. MARK RUSH, CPA Partner Ham, Langston & Brezina, LLP [email protected] New Individual Coverage HRA Turns the Clock Back to Pre-ACA Health Care Options S tarting January 1, 2020, employers can offer a new type of Health Reimbursement Account (HRA) called the Individual Coverage HRA, or ICHRA. The ICHRA allows you to: • reimburse (free of payroll and income tax) employees’ individual health care premiums and other permitted medical expenses, up to a dollar limit you choose—not one imposed by the government; • offer a regular group health plan (or not—it’s your choice) to certain employees and ICHRAs to other employees; • let employees pay for coverage, beyond the amount you reimburse, via a cafeteria plan if those employees have off-Exchange individual insurance coverage; • offer higher reimbursement levels to older workers and workers with more dependents; • allow employees to roll over excess ICHRA funds from year to year, without limitation; and • help employees out with their health care costs without fear of penalties. The ICHRA is a plan for employees. It’s not for the owners of partnerships, proprietorships, or S corporations. Employee Eligibility ICHRAs are available only to employees enrolled in • individual Exchange coverage, • other individual insurance coverage, or • Medicare. If you already offer a traditional group health plan, you cannot offer an ICHRA to the employees who are eligible for the group plan. Employers are legally barred from giving employees a choice between a group plan and the ICHRA. But you can offer a traditional group health plan to some classes of employees and the ICHRA to other classes of employees. Classes may be distinguished on the following factors: • Full-time employees • Part-time employees • Employees working in the same geographic location • Seasonal employees 16 MOMENTUM • Employees covered by the same collective bargaining agreement • Employees who have not satisfied a waiting period • Nonresident aliens with no U.S. income • Salaried workers • Non-salaried (e.g., hourly) workers • Temporary employees • Any group formed by a combination of two or more of the groups listed above Minimum class size requirements apply if you are offering a traditional group health plan to some employees and the ICHRA to other employees. The minimum class sizes are • 10 employees, for employers with fewer than 100 employees; • 10 percent of the total number of employees, for employers with 100 to 200 employees; and • 20 employees, for employers with more than 200 employees. The Clock Is Ticking Employers can start offering ICHRAs on January 1, 2020. You don’t need to provide the 90 days required notice in the first year, so you still have time to get your plan in place before January 1. But keep in mind that your employees will need to obtain individual insurance coverage, and many may need to use the open enrollment period that runs from November 1 through December 15. This means you should have your notice to the employees before November 1 if you want your ICHRA effective on January 1, 2020.