Oops, they did it again! – Health Reimbursement Accounts (HRAs)

1. Oops, they did it again! – Health Reimbursement Accounts (HRAs) Katie Dzurec and Mary Nugent

2. Panelist Background Katie Dzurec, JD, MPA, MCM • Senior Advisor to the Insurance Commissioner, Acting Director, Health Market Conduct Bureau, Pennsylvania Insurance Department • 12+ years of legislative and policy experience, with 10 years in health insurance and health policy • Centers for Medicare and Medicaid Services, Center for Consumer Information and Insurance Oversight for two years, and four years as a state regulator (Maine Bureau of Insurance and Pennsylvania Insurance Department)

3. Panelist Background J.P. Wieske,FLMI • Vice-President for State Affairs at Council for Affordable Health Coverage • Former Deputy Commissioner and Legislative Liaison/PIO for Wisconsin Office of Commissioner of Insurance 2011-2019 • More than 25 years in insurance serving regulatory, operational, lobbying, and policy roles with state government, insurers, and trade associations.

4. Panelist Background Mary Nugent, CIE, FLMI, AIRC, MCM, ACS • Director, Center for Consumer Information and Insurance Oversight, Oversight Group | Compliance and Enforcement Division • 11+ years of life and health insurance regulatory experience and over 25 years of insurance industry experience • Centers for Medicare and Medicaid Services, Center for Consumer Information and Insurance Oversight for six years and five years with the Maryland Insurance Administration  • Insurance industry worked in Underwriting, Policyholder Services, and Compliance (life and health products)

5. Moderator Background Heather Harley, AMCM, FLMI, HIA, MHP, DIA, LTCP, ACIP  • Market Regulation Manager for the INS Companies. • 15 years of regulatory insurance experience and 25 years of insurance experience • Mrs. Harley joined INS in 2009 and currently serves as Supervising Examiner for examinations and compliance projects for several states. Mrs. Harley has conducted market analysis reviews, market regulation examinations, lead for special projects, training sessions, and is currently overseeing complex Affordable Care Act (ACA) health and pharmacy reviews on behalf of Pennsylvania. Mrs. Harley has extensive experience as an examiner-in-charge, supervising field examiners, complex investigations, participating in multiple examinations, managing budgets, and drafting violations for reports.

6. What is a Health Reimbursement Account (HRA)? An HRA is a type of account-based group health plan funded solely by employer contributions (with no salary reduction contributions or other contributions by employees) that reimburses an employee solely for medical care expenses (which may include premium on health insurance coverage) incurred by the employee, or the employee's spouse, dependents, and children who, as of the end of the taxable year, have not attained age 27, up to a maximum dollar amount for a coverage period.

7. What is a Health Reimbursement Account (HRA)? (continued) An account-based group health plan is an employer-provided group health plan that provides for reimbursement of expenses for medical care (as defined under Code section 213(d)) (medical care expenses), subject to a maximum fixed-dollar amount of reimbursements for a period (for example, a calendar year).

8. What is a Health Reimbursement Account (HRA)? (continued) The reimbursements under these types of arrangements are excludable from the employee's income and wages for federal income tax and employment tax purposes. Amounts that remain in the HRA at the end of the year often may be used to reimburse medical care expenses incurred in later years, depending on the terms of the HRA.

9. HRA vs. HSA

10. What is a Group HRA versus an Individual Coverage HRA? • All HRAs are funded with employer dollars • All HRAs have tax-favored status • An Individual Coverage HRA can be used to purchase plans in the individual market • Impact on the consumer’s APTC calculation • State based marketplaces will need to account for HRA use in APTC eligibility determinations

11. HRA Rules will impact the Individual Market • Individual Coverage Health Reimbursement Arrangement (ICHRA) • Employers of all sizes • Covers individual health insurance (including excepted benefits) and medical expenses • Eligible employees cannot be eligible for the employer’s group health plan • Meets employer mandate requirements • In most cases, the employee is not eligible for a premium tax credit

12. HRA Rules will impact the Individual Market • Excepted Benefit Health Reimbursement Arrangement (EBHRA) • Employers of all sizes • Covers excepted benefits (long term care, fixed indemnity, vision, and dental) and short term insurance • Employers can contribute up to $1,800

13. HRA Rules will impact the Individual Market • Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) • Small employers only • Covers medical expenses or health insurance premiums • Employers can contribute up to $5,000 per employee and $10,000 per family • Employee’s premium tax credit amounts adjusted based on the employer’s contribution to the QSEHRA

14. What are the new group HRA rules and what do they mean? New Group HRA Rules • Nothing went away • Under excepted benefit HRA, added rules for short term limited duration benefits • Can be used to pay for unpaid qualifying expenses* *See resource slide for complete list

15. As a regulator, why are HRAs important for my state? What are the benefits? What should I review in product filings? • Overview of regulatory and policy implications • Guard rails for individual market protections

16. What are the challenges on the state and federal level? • Federal challenges • Pennsylvania challenges

17. Resource Links • Final HRA rule: https://www.federalregister.gov/documents/2019/06/20/2019-12571/health-reimbursement-arrangements-and-other-account-based-group-health-plans • Medical, dental, etc. expenses: https://www.govinfo.gov/content/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapB-partVII-sec213.pdf

18. Thank you and Q & A Thank you for attending. We would be happy to answer any questions.