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The Trump Administration's Newest Health Care Rule Could Shake Up Small Business Benefits Nationwide

Inc. logo Inc. 6/14/2019 Cameron Albert-Deitch
Donald Trump wearing a suit and tie: US-POLITICS-TRUMP-EMPLOYMENT© Getty Images US-POLITICS-TRUMP-EMPLOYMENT

The rule makes health reimbursement arrangement plans more accessible to small businesses beginning in 2020.

In less than six months, small business employees could have some of the same health insurance tax benefits as workers at large corporations.

On Thursday, the Trump administration issued a rule making health reimbursement arrangement (HRA) plans more accessible to workers nationwide. The use of HRA plans, which are funded with pre-tax money by employers, has long been restricted to exclude paying for insurance premiums. The new ruling, which goes into effect in January 2020, will change that.

The move, which runs counter to the Obama administration's health care policies, includes an explicit shot at the Affordable Care Act: Many employees will soon be able to use HRAs for non-ACA plans. The Wall Street Journal noted the double-edged nature of such an initiative:

Critics have said relaxing the restrictions could hurt consumers and insurance markets. They say employers may drop coverage and opt instead for HRAs that could shift people onto the individual insurance market.

And they say that more people will sign up for non-ACA-compliant health plans that can leave them with costly bills when certain expenses aren't covered. About 70 percent of these plans don't cover outpatient prescription drugs, according to a Kaiser Family Foundation analysis.

Typically, large companies with many employees have more negotiating leverage than smaller firms, and can attain stronger health insurance plans for their employees at lower rates. The Trump administration is framing the new rule as a way for some small businesses to level the playing field.

"There are some employers who would like to offer their employees health coverage, but the requirements have become so extensive or the cost has become so high, that they aren't able to," Alexandra Campau, a former special assistant for health policy to President Trump, told the Journal.

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