New rules could expand health insurance options for small businesses

For some time now, the question of how businesses – regardless of size – will continue to provide health insurance to their employees has been a critical issue. Recent years have seen employers shift more of the rising costs they face onto workers, in the form of higher premiums or larger deductibles, and the issue may be particularly problematic for smaller companies that don't have the bargaining heft of firms with even 100 workers.

To that end, the Trump administration recently announced new rules that would potentially help small businesses and their employees better meet their health care finance needs on an ongoing basis. This starts with a rule that expands access to health reimbursement arrangements so employees can shop for coverage that better fits their unique health care needs than a potentially one-size-fits-all plan from an employer that is unlikely to be able to afford comprehensive coverage.

They will become available as an option for employers at the beginning of 2020.

The White House is increasing insurance options for small businesses.

A closer look
What the HRA rule expansion allows is for smaller firms – an estimated 800,000 nationwide are now eligible to offer them to employees – to give workers money so they can buy their own insurance on the state- or federally run individual exchanges, the White House said. More than 11 million workers may consequently get more flexibility in their coverage, including about 800,000 who would otherwise go uninsured. This further does not preclude companies from offering health insurance in addition to HRAs, but could provide flexibility for employees who opt out. About 80% of companies that offer insurance in the first place only provide workers with one option, so HRAs could be beneficial in this way.

This comes in addition to the Trump administration's efforts to expand access to “skinny” association health plans – currently intended only as short-term stopgaps for people who would otherwise go without a longer-term option – which is being undertaken separately. But taken together, expanded access to HRAs and AHPs could help as many as 2 million more Americans find coverage, though it becomes incumbent upon the individual to adequately assess and identify the best options available to them with these expansions.

Understanding the new HRAs – and their impact
Under the new rules, HRAs – which are tax-free accounts for individuals funded by employers – are limited to $1,800 in contributions per year, The Associated Press noted. Usually, this money is used to provide additional benefits above and beyond a standard health plan, like dental or vision coverage. However, it can now be used to pay for association health plans, which have lower costs but also limited benefits, and in some cases do not cover people with pre-existing conditions.

Those within the health insurance sector seem to think that, as of now, HRAs could prove popular with smaller businesses simply because they provide a fixed cost instead of one that can rise – potentially significantly – from one year to the next. Moreover, this may be an attractive option because there are millions of small businesses nationwide that are just not required to provide health insurance to employees because of their size. Many do so anyway, simply because it's an expected part of the employer-employee relationship in the U.S., but the hundreds of thousands that do not may be enticed to enter the fray with use of HRAs. As an added bonus for employers, the money they contribute to these tax-free accounts is also tax-deductible.

However, experts caution some workers who already have employer-provided health insurance available to them may not warm to the idea of shopping for their own coverage, even if they are receiving a tax-free $1,800 to help defray their personal costs. Some may shy away from the offerings because because of their own personal lack of familiarity with the market or concerns over the time and effort it would take to make the most informed decision possible, and would instead prefer their employers continue to do the shopping for them.

Getting it right
With respect to the ability of shoppers to easily understand the terms of health insurance coverage, these new rules also come at a time when the Trump administration is also trying to increase transparency in pricing, formal plans for which could be announced in the near future. Seema Verma, administrator of the Centers for Medicare & Medicaid Services, told CNN Politics that a lack of transparency in how coverage is priced and what people are actually getting for their premium dollars is holding back the health insurance market overall.

As such, new rules are on the way to ensure people know what they're paying for, though what form the mandated transparency will take certainly remains to be seen as the White House is still deliberating on just how transparent the increased transparency will be.

It seems as if the increased efforts to improve people's access to and understanding of health care – as well as reducing its costs – are only going to continue as the 2020 election approaches. With that in mind, those within the health insurance and care sectors need to be cognizant of all the potential changes that could be made, and craft contingency plans to deal with them accordingly.