The Trump administration just announced a major regulatory change, effective Jan. 1, 2020, that could significantly expand access to affordable health coverage and increase the choice of health plans, particularly among workers and their families in small businesses.
The proposed rule, jointly developed by the Department of Health and Human Services and the Treasury Department, would allow employer-sponsored health reimbursement accounts to fund the purchase of individual health insurance on a tax-free basis.
Today, workers and their families can use tax-free health reimbursement accounts to offset medical expenses, such as out-of-pocket medical costs. Under the new rule, workers and their families could use employer contributions to the accounts to buy health insurance on their own.
This opportunity is particularly valuable for workers employed by small business owners who cannot afford to offer standard group health insurance, but who could afford to help offset the premium costs of their employees’ individual coverage.
Treasury Department officials estimate that the new rule could encourage as many as 800,000 employers to sponsor health reimbursement accounts, or HRAs, to fund individual coverage for more than 10 million workers.
This relief is crucial, particularly for workers and their families in small businesses. With the enactment of Obamacare in 2010, the already fragile condition of health coverage among small businesses worsened. For little companies with fewer than 25 workers, the percentage of businesses offering health insurance fell from 44 percent in 2010 to just 30 percent in 2018.
The Trump rule has the potential not only to expand coverage, but also to increase employees’ choices in health plans.
Among small and midsize companies (with fewer than 200 employees), 81 percent offered only one health plan as of last year. No choice, just a “take it or leave it” option.
The Trump rule would open up new coverage opportunities for employers and employees.
The rule also has some ancillary benefits for workers already covered by traditional, employer-sponsored health insurance. It would permit employers to contribute up to $1,800 yearly (indexed to inflation) to reimburse workers for certain additional medical expenses, such as dental benefits, as well as premiums for short-term health insurance plans. Such less expensive plans are especially valuable for persons who are between jobs.
Read the full story from The Daily Signal
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