Three new forms of HRAs for employers to understand and evaluate

In this article we explain the new HRAs: qualified small employer (QSEHRAs), individual coverage (ICHRAs) and excepted benefit (EBHRAs).

How can these be used to adapt to a surgical cost containment program? Read on to learn a little more.

QSEHRAs

These HRAs have been available since 2016 but only to employers of fewer than 50 full-time workers, all of whom must be automatically eligible.  They are available only to employers who do not offer group healthcare coverage. The employer contribution amount is limited in 2019 to $5,150 per single employee or $10,450 per employee with a family.  If an employee goes without minimum essential coverage (a penalty-free option since Jan. 1, 2019), QSEHRA reimbursements are taxable to the employee.

USE/ COVERAGE

QSEHRA money can be used for any purpose considered a medical expense by the IRS as listed in IRC213D (Publication 502) and balances roll over from year to year but reimbursements from the plan are limited annually.  

DISCUSSION

That means that if an employee uses SurgeryShopper, finds a provider they want at a price that attracts them to a destination they are willing to travel, the HRA can be used to pay for the surgery, pre-op testing and consultations, and related travel to go to the provider’s destination and return home. Since many airfare prices hover in the $350 range per seat or less and hotels range about $150 or less for about 4-5 nights, you could cover a tonsillectomy, hernia, and even some joint surgeries with that budget. Add a no interest loan to cover the balance and you are on your way. An employee who saved and rolled over some HRA money since 2016 is in good shape to cover a knee or hip replacement with little or no amount financed, inclusive of travel depending on which provider you choose. 

Currently, SurgeryShopper.com is the only formally-organized network of contracted healthcare providers that does not charge an employer a monthly network access fee to use its program.

ICHRAs

These HRAs will be available for employers to offer in plan years beginning Jan. 1, 2020. There are no employer size restrictions on ICHRAs and no employer contribution limits per year. 

USE/ COVERAGE

Employers can segment their employee populations by up to 11 different criteria (e.g., full-time, part-time, hourly, salaried, union, non-union and combination). Importantly, for each employee group, only either an ICHRA or a group health coverage plan may be offered, not both.

 
For certain groupings, participation must meet minimum class size standards imposed by the IRS and intended to avoid adverse selection. Like QSEHRAs, ICHRA money can be used for any purpose considered a medical expense by the IRS as listed in IRC213D (Publication 502) and balances roll over from year to year.  

Discussion
Without a limit on contributions, if an employer so desired, they could cover up to a certain amount each year for primary care coverage, and then offer to cover 100% of the surgery package plus travel costs and case management up to a certain max per diem plus gas or airfare and save as much as $20,000 or more on the price of a single surgery. Again, since SurgeryShopper charges no “PPO-like” network access fees, employer funds go farther with our program. Call on a consulting partner from SurgeryShopper.com to help you set this up together with your accounting professional. You’ll be surprised how little is involved to get started. And, you’ll mitigate the risk of broker and agent embedded fees and commissions charged to providers that cause prices to be set higher in the marketplace to cover the kickbacks.

EBHRAs

EBHRAs will be available for employers to offer in plan years beginning Jan. 1, 2020, with no employer size restrictions. To offer an EBHRA, an employer must offer group healthcare coverage. Contributions per employee are limited to $1,800 in 2020, regardless of family status. EBHRA money can be used only to reimburse excepted benefits.

USE/COVERAGE:

These new HRAs were created to act as employee reimbursement mechanisms for new and expanded health plans specifically designed to evade ACA consumer protections (yikes!). They were created with the intent that believes that the changes will result in lower premiums-frankly, we are dubious. Some of the uses include expansions of association health plans (AHPs) that have been suspended awaiting success of an appeal of a March federal district court opinion striking down the expansion. Also for short-term, limited duration insurance (these products are facing extreme scrutiny and have been outlawed or severely restricted in a growing list of states. We actually helped do some market research and mystery shopping on these short-term limited duration programs through our OnPoint™ product for a hedge-fund client doing due diligence.

Both are designed to circumvent various ACA protections by reimposing restrictions like annual and lifetime reimbursement limits, ignoring minimum essential coverage standards and reintroducing pre-existing condition exclusions. We don’t like any of those intentions, truth be told.

DISCUSSION

The maximum benefit limit plus the intention of this HRA and its applicability seems unlikely to get traction. We don’t have much to offer under this HRA, and unless something changes in the political and legislative arena, we don’t see SurgeryShopper developing a program to align with this particular HRA program in the foreseeable future. There’s too many other places we can focus with more gain for all concerned.

SurgeryShopper.com has suspended most operations due to COVID19 travel restrictions and our participating health facilities' limitations to accommodate all but essential and urgent cases. We'll resume service based on our re-assessment scheduled for May 1, 2020.

In this ‘time out” period, we’ll be doing some website overhaul, and working on adding new provider listings, and other “rainy day” tasks that can be accomplished by team members working from home.

If you’d like to plan or inquire about a procedure upon our resumption of services, our telephones are still fully staffed around the clock utilizing our quality assurance backup contingencies, so call anytime. 

TIP: If you know you need to plan an elective surgery or shop prices, get started ASAP. Once hospitals and outpatient surgery centers resume normal operations and replenish supplies in high demand, elective scheduled surgery will be overwhelmed. In the event of price increases, lock in your price quotes, reserve your surgery and consultation appointments, and arrange any needed financing for summer surgeries as soon as you are ready.

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