While Washington is abuzz with the prospect of an Affordable Care Act repeal—or at least substantial reforms amid Donald Trump’s rise to power—President Obama on Dec. 13 signed into law health care legislation that has been described as the largest health reform bill approved by Congress since the Affordable Care Act.
The 21st Century Cures Act covers a range of issues from mental illness to quicker approval of drugs to research funding. Most importantly for providers of health care accounts and related payments cards, the legislation enables small employers with fewer than 50 full-time employees to provide standalone health reimbursement arrangements (HRAs) that can be used to reimburse eligible health care expenses, including health insurance premiums. During its current lame-duck session, the Senate approved the bill 94-5 after the House approved it 392-26.
“Small employers, most of whom don’t offer group health insurance because of cost and complexity, can now provide assistance to their employees in paying for individual health insurance and out-of-pocket health care costs,” Chris Byrd, WEX Health executive vice president, tells Paybefore. The legislation opens up a market that was closed by the Affordable Care Act and will lead to stronger growth in HRAs, with prepaid serving as an effective reimbursement payment mechanism, he adds. Aite Group estimates there will be 19 million HRA accounts by the end of 2018, according to a report last year.
WEX Health brought the issue of HRAs to the attention of lawmakers and staff on Capitol Hill three years ago, in response to multiple rulings from the IRS, Health and Human Services, and Department of Labor that effectively outlawed standalone HRAs, according to the company. WEX Health said it took a leadership position in advocating for the change, while building a coalition of business and industry groups and generating bipartisan support. “Looking forward, the early signals from the incoming administration suggest that we will see further reforms that will strengthen and broaden the market for consumer-directed health accounts, where cards are the preferred method of payment for consumers,” Byrd says.
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