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“What’s Next In Congress” Update

“What’s Next In Congress” Update

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

The ACA and ACA’s Taxes

  • Okay, so we now know we are looking at a Democratic House of Representatives and a Republican Senate. Will anything get done? Answer: Probably not, but some stuff may sneak through. One thing is for sure: There will certainly be a lot of “noise,” a lot of “oversight,” and a lot of Congressional hearings on health care.
    • Analysis: I am attaching my update from over a month ago where I discussed what I think Congress may do if we have a Democratic House and a Republican Senate (see attached). Much of what I said in that update has not really changed. But, let me freshen-up my thoughts a bit. Let me start with the Cadillac Tax. There is a much stronger chance that the Cadillac Tax is fully repealed now that we have a Democratic House. The labor community will no doubt pressure House Democrats to pass a repeal bill, and we could very well see such a repeal bill get out of the House. But what about the Senate? Well, 90 Senators voted to fully repeal the Cadillac Tax. BUT, that vote was essentially a symbolic vote. BUT, could at least 60 Senators make it a “real” vote. It is entirely possible. The only hang-up will be “the cost” of full repeal. While the Joint Committee on Taxation continues to lower the “score” of full repeal, full repeal still costs a-whole-heck-of-a-lot of money.  This “cost” issue could be the reason – or the scapegoat – for why the Cadillac Tax stays. What about other ACA taxes like the excise tax on insurance companies and the device tax? The device tax may be fully repealed in “lame duck” (which we will discuss later), so we might not have to worry about it next year. The excise tax on insurance companies, however, will not fare so well in my opinion. The recent news reports that insurance carriers are “pocketing” the savings that has been realized on account of delay of the excise tax is NOT sitting well with members of Congress, both Democrats AND Republicans. Soooo, full repeal of the excise tax is an uphill battle. Even another delay won’t be easy. If there is another delay, we will likely see some language that requires the carriers to pass ALL of the savings through to the consumer. Since the ACA will remain the law of the land for the foreseeable future, I do NOT see any changes to the employer mandate. I also do NOT see changes to the employer “reporting” requirements. Maybe we see some sort of simplifications of the reporting requirements, which is something the employer community has advocated for for a long time now. But, I am skeptical. Again, the ACA will be the law of the land for the foreseeable future.  And, I foresee this Congress trying – and actually succeeding – in “improving” the ACA. I could very well see Federal funding for some sort of reinsurance program or invisible high-risk pool. I could also see the “family glitch” getting fixed. I can’t see cost-sharing subsidies being reinstated because “silver-loading” helps most consumers. Maybe there are changes to the ACA’s “risk adjustment” program, but the risk adjustment program is so darn complicated that I do NOT believe Congress can figure out what type of changes to make. The actuaries at HHS have to make the changes.


Other Health Care Policy Changes

  • Drug pricing will be a BIG issue in the next Congress. But will anything substantive get done? Phrma has A LOT of influence. And, the drug pricing issue makes a GREAT 2020 campaign issue. Soooo, a strong argument can be made that nothing substantive gets done.
    • Analysis: BUT, now that Sen. Grassley (R-IA) is taking over Senate Finance (my old boss while I was on Finance), there is speculation that the Finance Committee will be very active in the drug pricing space. Sen. Grassley has been a champion of the disclosure of drug prices, and he has also cracked down on pharmaceutical companies that have jacked up drug costs exponentially. Sen. Grassley is also NOT a fan of “patient assistance” groups funded by private-sector companies. Tax-exempt hospitals have also been on Sen. Grassley’s radar for reform. Now that Sen. Grassley has the reins of the Senate’s tax-writing Committee, it would not surprise me at all if Sen. Grassley seeks to change behavior through the Tax Code.  What I mean is, Sen. Grassley – while always active on the oversight-side of things – now has additional “levers” at his disposal to effectuate change. And Sen. Grassley can pull those “levers” by conditioning certain tax preferences on increasing the disclosure of drug prices, or taking away the tax-exempt status of a so-called non-profit patient assistance groups, or continuing to change the tax laws for tax-exempt hospitals. I believe that enacting some sort of surprise medical bill legislation will be a priority for BOTH Democrats and Republicans in BOTH the House and the Senate. I have been thinking a lot about the surprise medical bill issue recently, and I think it breaks down like this: If a patient receives medical services at an in-network hospital from an out-of-network provider, it is NOT fair for this out-of-network provider to send a “balance-bill” to the patient. In many cases, out-of-network providers affirmatively choose to stay out of a health plan’s network. This decision is primarily driven by the understanding that the medical professional can charge more than the in-network rates, “balance bill” the patient, and ultimately receive higher payments than they would have otherwise received as an in-network provider. This perverse incentive needs to be mitigated, if not eliminated entirely in any proposal to address surprise billing practices. To do so, out-of-network providers at an in-network hospital MUST accept the plan’s in-network rates. This protects the patient, and it does NOT require the employer or the insurance carrier to pick up the tab. This should also reduce unnecessary health care spending. However, in cases where a patient is brought to an out-of-network provider in an emergency situation, this one is a tougher nut to crack. It is clear that the patient needs to be protected from any excess “balance-bill.” But should the employer or the carrier be required to pay any excess over and above the health plan’s in-network rates? This is something that will be debated next year. What about HSA policy changes? As I will discuss more fully below, there may be some bi-partisanship on some HSA policies. Once we get into next year, however, the only HSA provisions that I could see move is the ability to maintain HSA eligibility even if the HDHP makes first-dollar payments for certain chronic care services, tele-health services, and direct primary care access. You would think the change that would allow people on Medicare Part A to contribute to an HSA would move too, but I could see House Democrats thinking that HSAs are too private market-focused. And House Democrats already want to go in a totally different direction, especially when Medicare is involved (i.e., the continued pursuit of some form of “Medicare-for-All”). Speaking of some form a “Medicare-for-All,” there will be lots and lots of discussion on the various “shades” of single-payer next year. BUT, nothing substantive will happen. It is likely that the House will pass some consensus bill on some form a “Medicare-for-All,” or House Democrats may piece-meal things like passing a “public option” for the Exchange markets, Medicaid buy-in, Medicare buy-in, and “price controls” on certain medical services (e.g., dialysis or prescription drugs or other high-cost medical services).


What About “Lame Duck”?

  • Congress will be back in session after the Thanksgiving holiday for up to 2 to 3 weeks. Can anything get done in these 2 to 3 weeks?
    • Analysis: Congress needs to “fund the government.” So, expect a government-funding bill OR a government shut-down.  The President has signaled interest in holding up a government-funding bill to get funding “to build a wall.” Congress also wants to also pass an “omnibus” measure, which will likely include a lot of things. For example, while I do not play in the FDA space, I could see CREATES moving in lame duck. And if CREATES moves, there is a likelihood that the “donut hole” fix Phrma has been pushing for all year now goes with it. This omnibus could include a tax vehicle. For example, Tax Reform bill technical corrections, tax extenders, IRS reform, retirement savings provisions, device tax repeal, and disaster relief could be included. If there is a tax vehicle, will HSA policy changes move along with it? In my opinion, if HSA provisions are going to move at all in lame duck, they will ONLY move on a tax vehicle. In other words, while there may be some health care-related provisions included in a lame duck bill – for example, CREATES and/or the “donut hole” fix – this won’t be enough for HSA provisions to ride along with the health care changes. BUT a tax vehicle, that is the most likely vehicle. So then, if there is a tax vehicle, what HSA provisions could move? I would find it hard to believe that there are 60 votes in the Senate for increasing the HSA contribution limits to the out-of-pocket maximum amounts. This is too much of a “Republican idea,” and it costs too much. But what I could see moving is the bi-partisan HSA policies I discussed above – the ability to maintain HSA eligibility even if the HDHP makes first-dollar payments for certain chronic care services, tele-health services, and direct primary care access. We could also see repeal of the ACA’s prohibition on tax-free reimbursements for over-the-counter drugs. We could see HSA eligibility for people on Medicare Part A, and we could see preferential tax treatment for sport and fitness-related expenses. Unfortunately, I give these HSA changes – even if you picked out 1 or 2 of them from the above list – a low probability of happening in lame duck. BUT, the door is not totally closed. Strange things happen during the end-of-year legislative exercise. I will keep you apprised of developments over the next 2 to 3 weeks.


Employer Update

Proposed HRA Regulations Finally Released – “Sabotage” and “Discrimination”?

  • President Trump’s October 2017 Executive Order called for regulations (1) expanding “association health plans” (AHPs), (2) expanding “short-term health plans,” and (3) expanding the use of Health Reimbursement Arrangements (HRAs). The AHP rules were proposed in January and finalized in June. The short-term health plan rules were proposed in February and finalized in August. The HRA rules, however, were nowhere to be found. Well, they were finally issued in proposed form in October, which means, they won’t be finalized until probably the end of the 1st Quarter of 2019.
    • Analysis: BTW, there were not that many negative stories about the proposed HRA rules. What I mean is, we didn’t see a lot of cries of “sabotage” of the ACA in the wake of the release of the proposed HRA regs. There were, of course, stories that were written with a specific narrative in mind (e.g., that employers will be able to discriminate against employees under these new HRA rules). From my perspective, it is not surprising that we did not hear cries of “sabotage.” Why? Because a strong argument can be made that the HRA rules will help the “individual” market, or at a minimum – in most if not all markets – the HRA rules are NOT likely to have a negative impact. When it comes to discrimination, however, I respectfully differ with these assertions. Why? Because – generally speaking – the proposed HRA rules did NOT create any new rules.  What I mean is, most if not all of the HRA rules mirror the rules in the “group” market. And, most people out there – even critics of everything this Administration does – do NOT think that there is a lot of discrimination (if any) in employer plans.  Soooo, if you do NOT think there is discrimination in employer plans, you should NOT think that there will be discrimination resulting from the proposed HRA rules. Here is what I mean: The proposed HRA regulations created 2 new “types” of HRAs – (1) an HRA that can used to purchase an “individual” market plan on a tax-free basis and (2) an “excepted benefit HRA” that can offer up to $1,800 to pay for medical expenses other than premiums for an “individual” market plan, a “group health plan,” and Medicare. When it comes to the HRA that can used to purchase an “individual” market plan on a tax-free basis, if an employer chooses to offer such an arrangement to its employees, the HRA MUST be offered to ALL employees in a specified “class” of employees. We will talk about these “classes” below, but let’s focus on this first rule for a moment.  Again, the HRA MUST be offered to ALL employees of the same “class.” That is NOT discrimination, and it mirrors the rule in the “group” market that requires health benefits to be offered on the same terms and conditions to all “similarly situated employees.” Importantly, the amount of money that can be put in the HRA to purchase an “individual” market plan is uncapped. In other words, NO dollar limit is placed on the HRA contribution. Just as important is this: An employer MUST give the same HRA contribution amount to ALL employees of the same “class.” Actually, that is not entirely true.  An employer can vary the HRA contribution by “age” and by “family size.”  In other words, an employer can give an older person a higher contribution amount than a younger person. This makes good policy sense because – as we all know – health care is more expensive the older you are. In addition, an employer can give an employee +1 dependent and employees with multiple dependents higher contribution amounts than single employees. Again, this makes sense because the more dependents you have, the more expensive health insurance gets. The MOST important thing here is this:  If the employer varies its HRA contributions by “age” and/or “family size,” the employer MUST give the same contribution amount to ALL employees in the same “class” who are the SAME age and or have the SAME family size. This again, mirrors the “group” non-discrimination rules that say that ALL “similarly situated employees” must get the same employer contribution for health insurance. Do you see any discrimination yet? Let’s talk about one more aspect of the rules, and then we will turn to the “class” issue. In order to treat the HRA contribution as tax-free, the employee MUST purchase an “individual” market plan.  In the case of those employers that decide to adopt the HRA arrangement once the regulations are finalized (where employees will be purchasing “individual” market plans for the first time), the “individual” market plan WILL BE ACA-compliant. In other words, the “comprehensive” coverage that ACA supporters demand – which includes pre-ex protections and no underwriting based on health status – MUST be purchased before an employee can use a tax-free HRA contribution to purchase the plan. You can’t really argue “discrimination” as it relates to this “type” of health coverage the newly created HRA can buy, can you? Pssssstttt, you CANNOT buy a “short-term health plan” through this “type” of HRA. Again, you can ONLY purchase an ACA-compliant “individual” market plan through this “type” of HRA.


Proposed HRA Regulations Finally Released – The “All or Nothing” Proposition and the “Classes”

  • Sticking with our discussion of the “type” of HRA that can be used to purchase an “individual” market plan, an employer MUST decide (1) whether it wants to offer its employee a “group health plan” OR (2) whether it wants to offer its employee the HRA arrangement. In other words, an employer CANNOT offer a “group health plan” to some of its employees and also an HRA arrangement to other employees. Instead, the employer must decide between 1 of these 2 types of health coverage to offer to their employees. Hence my reference: The “all or nothing” proposition.
    • Analysis: Okay, so let’s talk about the “classes.” The general rule discussed above is that the employer must decide between (1) a “group health plan” OR (2) the HRA arrangement. Once the employer makes its decision, the employer must make the offer to ALL employees in the same “class.” The “classes” break-down like this: (1) Full-Time Employee “Class,” (2) Part-Time Employee “Class,” (3) Union Employee “Class,” (4) Seasonal Employee “Class,” (5) Foreign Employee “Class,” (6) Employees In a Waiting Period “Class,” (7) Employees Under Age 25 “Class,” and (8) Employees In Different Geographic Location “Class.” So, connecting-the-dots on this “all or nothing” proposition + the “classes,” we now know this: An employer CANNOT offer a “group health plan” to some of its Full-Time Employees and also an HRA arrangement to other Full-Time Employees. Again, it is “all or nothing.” BUT, an employer CAN offer a “group health plan” to its Full-Time Employee “Class” and also an HRA arrangement to its Part-Time Employee “Class” or its Seasonal Employee “Class” or its Foreign Employee “Class” or Employees In a Waiting Period “Class”…well, you get the gist. Some may argue that the development of these “classes” breeds “discrimination.” I am not saying I disagree. But this is what I am saying: Under current law (i.e., the employer mandate), large employers are NOT penalized if they do NOT offer coverage to Part-Time Employees or Seasonal Employees or Employees In a Waiting Period. And guess what?!? Most employers do NOT offer these “classes” of employees coverage (because the employer mandate does not require them to). But also guess what?!? The proposed HRA rules now offer Part-Time Employees or Seasonal Employees or Employees In a Waiting Period some sort of tax-free contribution to purchase health coverage. Coverage that is comprehensive (i.e., an ACA-compliant “individual” market). And in many cases, there was NO coverage option EVER made available to this “class” of employee. So to me, this is actually a very positive aspect of the HRA rules, which not many people are talking about. That is, employers now have the ability to offer a health coverage option to “classes” of employees who I would consider under-served “classes.” Which means, these under-served “classes” of employees can now go out an purchase an ACA-compliant plan. With tax-free dollars no less.  Dare-I-say-it: I believe this policy change will increase the number of lives in the “individual” market risk pool. Critics will likely say that some of the under-served “classes” are full of unhealthy people, and employers can now bifurcate their own risk pool and segregate the bad risk from the good risk. My response: These under-served “classes” of employees were NOT in the employer’s risk pool in the first place (because employers are generally NOT offering coverage to these “classes”). I have another response: Not all of the employees in these under-served “classes” are unhealthy. Some are, of course, but some are not. And if the healthy lives go into the “individual” market too, well then, I believe that is good for the “individual” market. I know some actuaries will disagree with me. Let’s wait and see what happens.


Proposed HRA Regulations Finally Released – Employees and the ACA’s Premium Subsidies

  • Some critics may be saying, Chris, you talk about these under-served “classes” of employees being helped by their employers.  But what happens if the employer only gives an employee $50.  That is NOT helping the employee because they CANNOT afford health coverage with, for example, a $50 contribution.  My response:  The proposed HRA rules allow an employee to “opt-out” of the HRA arrangement.  In other words, the employee can say, “Hey employer, thanks for the $50, but no thanks…I am going to go to individual market and buy my own subsidized plan because my income is low enough where I qualify for an ACA premium subsidy.”
    • Analysis: Let me back up a second to say this: The proposed HRA regulations develop a general rule which says – like an employer-sponsored plan – if an HRA arrangement is “affordable” and the individual market plan provides “minimum value,” an employee offered access to the HRA arrangement is NOT eligible for a premium subsidy. Stated differently, like an employer-sponsored plan, if the HRA arrangement is “UNaffordable” or the individual market plan does NOT provide “minimum value,” then an employer IS eligible for a premium subsidy. Note, if the employee decided to take the $50 offered through the HRA, then like the current law eligibility rules for the premium subsidies, the employee would NOT be eligible to access the subsidy. In other words, under the current rules that apply in the case of an employer plan, if an employee enrolls in the employer plan – even in cases where the plan is “unaffordable” or does not provide “minimum value” – the employee CANNOT access a premium subsidy. Same is true if the employee takes the $50 offered through the HRA (it is the equivalent to enrolling in an employer plan). Speaking of a plan being “unaffordable,” obviously if an employer gave an employee $50, this contribution would NOT make the purchase of an ACA-compliant plan “affordable.”  But how do you determine “affordability” under the HRA rules? In short, the HRA rules developed an “affordability” test that looks to the cost of the lowest cost “silver” self-only plan in an employee’s “rating area.” If the HRA contribution still makes the cost of this lowest cost “silver” self-only plan exceed 9.56% of the employee’s “household income,” the HRA arrangement is deemed “UNaffordable,” and if an employee “opts out” of the HRA arrangement, the employee CAN qualify for a premium subsidy. The HRA regs confirm that the ACA Exchange is the entity that determines whether the HRA contribution is “UNaffordable.”  The employer does NOT. The employer will, however, be required to determine whether the HRA contribution is “affordable” in accordance with the employer mandate requirements (discussed immediately below).


Proposed HRA Regulations Finally Released – The Employer Mandate

  • Because the offer of an HRA to purchase an individual market plan is equivalent to an offer of an employer-sponsored plan, the proposed HRA rules tell us that an employer with 50 or more FTEs (i.e., an employer subject to the employer mandate) will satisfy the employer mandate’s “A-penalty” if the ability to use the HRA is offered to at least 95% of the employer’s “full-time employees” and dependents.
    • Analysis: In addition, an employer with 50 or more FTEs will satisfy the employer mandate’s “B-penalty” if the HRA is “affordable.” Importantly, because the “affordability” test looks to the lowest cost “silver” plan, this plan will by definition satisfy the “minimum value” test because the plan will provide at least a 66% actuarial value (which automatically satisfies the “minimum value” test which requires the plan to cover at least 60% of the cost benefits covered under the plan). As stated above, the “affordability” test is satisfied if the HRA contribution offered by an employer subject to the employer mandate requires the employee to pay LESS than 9.56% of their “household income” for the lowest cost “silver” self-only plan in the employee’s “rating area.” Just yesterday, Treasury and the IRS issued additional guidance relating the employer mandate and the new HRA arrangement that can be used to purchase an individual market plan – Notice 2018-88.  According to the guidance, determining whether an HRA contribution is “affordable” is indeed determined based on the lowest cost “silver” self-only plan in the employee’s “rating area.” However, to ease the administrative burden associated with making an employee-by-employee determination (and looking at EACH employee’s “rating area”), Notice 2018-88 allows an employer to look to the lowest cost “silver” plan offered in the rating area where the employee’s work site is located, rather than where the employee resides. In general, the “affordability” determination for each employee typically would be based on the employee’s age. However, Treasury and the IRS believe that such a determination may be difficult for an employer. As a result, Treasury and the IRS requested comments from the public on the administrative issues and burdens that would arise for employers in determining the employee’s contribution for the lowest cost “silver” self-only plan based on the employee’s age. Treasury and the IRS further requested suggestions as to any safe harbors or other alternatives that would ease the burdens of determining an employee’s required contribution based on age. For example, Treasury and the IRS ask whether the ability to use age bands or other assumptions concerning employee age would lower an employer’s administrative burden without disadvantaging employees. Treasury and the IRS also identified an issue relating to determining “affordability” when the cost of the lowest cost “silver” self-only plan is not available until the Fall of year prior the year the HRA arrangement is made available. In this case, Treasury and the IRS recognized that employers like – and need – to plan in advance, and therefore, looking to the cost of the lowest cost “silver” self-only plan in the Fall may be problematic. As a result, Treasury and the IRS will allow an employer to determine “affordability” based on the prior year cost of the lowest cost “silver” self-only plan. In reality, an employer will look to the cost of the lowest cost “silver” self-only plan in the “current year” when planning their HRA contribution amounts for the following year (and whether their contribution is sufficient to satisfy the “affordability” test in the following year). Treasury and IRS requested comments on whether an “adjustment” to the cost of the prior year lowest cost “silver” plan is necessary to reflect changes in the cost of plans year-to-year. Treasury and the IRS confirm that an employer offering an HRA arrangement can rely on the employer mandate’s affordability “safe harbors” available to employers offering a “group health plan” (e.g., using an employee’s W-2 income or hourly rate of pay to determine if the HRA contribution is “affordable”). Lastly, Treasury and the IRS confirm that employers with 50 or more FTEs that offer an HRA to employees to purchase an individual market plan are STILL subject to the employer mandate’s “reporting” requirements (e.g., the 1095-C Forms). Treasury and IRS intend to issue guidance on how these employers should determine an employee’s required contribution, which is something that MUST be reported on the 1095-C.


Proposed HRA Regulations Finally Released – ERISA and the HRA Arrangement

  • One attractive feature of the new HRA arrangement that allows employees to purchase an individual market plan is that – if certain requirements are met – the HRA arrangement will NOT be subject to ERISA’s requirements. This is an important feature because employers who simply want to give their employees a defined contribution to purchase health insurance – and not be hassled by the rules and requirements that go along with offering a “group health plan” – can now do so without triggering ERISA’s requirements.
    • Analysis: However, just like most rules, certain requirements have to be met if the employer does NOT want their HRA arrangement to governed by ERISA. The requirements include: (1) The purchase of the individual market plan MUST be voluntary for employees (e.g., enrollment in a plan CANNOT be a condition employment), (2) The employer CANNOT select or endorse any particular insurance company or individual market plan (e.g., providing general contact information for an ACA Exchange or allowing a Web-Broker Entity (WBE) to assist employee enrollment is permitted), (3) The reimbursement MUST be limited SOLELY to premiums for an individual market plan, (4) The employer CANNOT receive any compensation in connection with the employee’s purchase of an individual market plan (i.e., the employer CANNOT get a commission or some other in-kind benefit), and (5) The employee MUST receive annual notice that the individual market plan is NOT subject to ERISA. Critics may argue that the proposed HRA rules are bad for employees because the rules allow employers to get out from under ERISA, which has specific consumer protections for employees covered under a “group health plan.”  On the one hand, I do not disagree with this point.  But on the other hand, most employers who will decide to offer an HRA arrangement – instead of a “group health plan” – are doing so to get out the “health care game” (i.e., to get out of sponsoring a “group health plan”). Why? Because sponsoring a “group health plan” is too expensive and/or too administratively burdensome. BUT, by allowing these employers to get out of the health game, while also allowing them to contribute money toward the purchase of health insurance, keeps the “employer dollars” in the game. In other words, the employer continues as the “financier” of health insurance even though the employer is not actually sponsoring a full-blown “group health plan.” A strong argument can be made that imposing various rules and requirements that may discourage an employer from keeping their employer dollars “in the game” is ill-advised. In other words, if an employer that simply wants to act as the “financier” of its employees health insurance is subject to ERISA’s requirements, you will likely see a smaller number of employers offering an HRA arrangement that allows employees to purchase an individual market plan on a tax-free basis. One aspect that critics overlook is this:  Even though the HRA arrangement used to purchase an individual market plan is NOT subject to ERISA, the HRA – as a “group health plan” itself – IS subject to ERISA. The Departments actually requested comments from the public on whether subregulatory guidance should be issued to tell employers how to comply with ERISA’s requirements as it relates to the HRA itself.


Proposed HRA Regulations Finally Released – The “Excepted Benefit” HRA

  • The second “type” of HRA that the proposed regulations create is the “excepted benefit” HRA. According the regs, an employer may offer an “excepted benefit” HRA to its employees, but ONLY if the employer ALSO offers “group health plan” coverage. The employee is NOT required to actually enroll in the “group health plan” to get access to the “excepted benefit” HRA. But again, the employer MUST offer “group health plan” coverage along with the “excepted benefit” HRA.
    • Analysis: The contribution amount in the “excepted benefit” HRA is limited to $1,800. This $1,800 is indexed to increase each year by the new chained CPI. The HRA contribution amounts CANNOT be used to pay for premiums for a group health plan, or an individual market plan, or Medicare Parts B and D. BUT, contributions can be used to pay for short-term health plans, COBRA, and other “excepted benefits” (e.g., disability, vision, and dental). The “excepted benefit” HRA must be made available to ALL “similarly situated employees.” BTW, critics are really confused about this “excepted benefit” HRA. They actually think that employers are going to push their employees into a short-term health plan.  But that is NOT case, nor will it ever be the case, in my opinion. Why? Because as a condition to offering an “excepted benefit” HRA, an employer MUST offer a “group health plan.” So, it is NOT like an employee does NOT have access to comprehensive coverage. They do…it’s the “group health plan.” And, if the cost of the “group health plan” is “UNaffordable,” then the employee can go and purchase a subsidized Exchange plan, provided they are income eligible. Yes, an employee may CHOOSE on their own to NOT enroll in the “group health plan,” take the $1,800, and purchase a short-term health plan. But this is the employee’s choice. It is NOT the employer arbitrarily “discriminating” against an employee and pushing them to a short-term health plan.