A league of insurers and brokers is forming a coalition aimed at defending a Trump-era rule that allows employers to subsidize individual market plans for workers instead of offering group insurance.
The HRA Council, with members including Centene Corp. and Oscar, will advocate for the Biden administration to keep a 2020 rule allowing employers to give workers pre-tax money through Individual Coverage Health Reimbursement Arrangements (ICHRAs) to buy insurance on the individual market.
The council and other supporters of the rule argue it can help employers facing increasingly high healthcare costs save money while giving workers more options for health plans. Under the ACA, large employers must offer health insurance to their workers or pay a fine.
“For employers, it’s really about making the offering of health insurance easier,” said Brian Blase, a former Trump administration official who helped draft the ICHRA rule and is now advising the council.
The rule could also allow small businesses to offer health coverage when they might not have before due to the cost, said Ken Janda, interim executive director of the HRA Council.
But the Biden administration is considering doing away with or changing the rule and other Trump-era regulations.
“Part of the reason why we’re here is to make sure that doesn’t happen,” Janda said. “This should be a nonpartisan issue.”
He argued rescinding the rule would be disruptive to employers who started using ICHRAs, but he’s optimistic the Biden administration will keep it. The rule took effect in January 2020. There’s not much data yet about how many workers are in ICHRAs, but the Labor Department under Trump estimated 11 million people eventually could be.
“Defined contribution is something more and more employers are going to be looking at,” Janda said. “We need to be able to have a robust conversation with various stakeholders to make sure that this new movement toward defined contribution works for everybody. We don’t want it to blow up the individual marketplace. We don’t want it to blow up the group market.”
But others say the rule could lead employers with sicker workers to use ICHRAs, potentially causing premium increases in the individual market that would force workers to find coverage on their own and lead to discrimination against some classes of employees.
Under the rule, businesses can designate “classes” of workers that will be offered an HRA or a group health plan, based on whether they are full or part time, salaried or hourly or based on geography.
The final rule added a minimum class size, which HHS said is intended to protect against employers trying to manipulate the system to shift sicker workers into the individual market while keeping healthier ones in a group plan to save money.
“We think that type of policy will allow businesses … to inadvertently discriminate against their workforce,” said Sonja Nesbit, executive director of Keep US Covered, a coalition of groups—including Little Lobbyists and AIDS United—that formed to urge the Biden administration to rescind the rule.
Employers are increasingly spending more money on healthcare, with premiums typically going up every year.
Annual premiums for employer-sponsored family health coverage topped $21,000 in 2020, with workers paying about $5,500 of that, according to the Kaiser Family Foundation. But ICHRAs aren’t the solution to rising healthcare costs, Nesbit argued.
“We don’t think a short-term policy proposal should be flipped into long-term policy,” she said.