Health Reimbursement Arrangement (HRA) Rules in Illinois
Upon hearing the claims by the Colorado Department of Insurance (see Tyler's earlier post), a Health Reimbursement Arrangement (HRA) distributor in Illinois contacted the Illinois Department of Insurance (DOI) to understand their stance on HRAs. Specifically, the insurance agent (i.e. the HRA distributor) explained to a representative at Illinois Department of Insurance that an Illinois employer (with less than 50 employees) wanted to exercise his federal right to establish an HRA to reimburse employees' individual health insurance policies.
Departments of Insurance Do Not Regulate HRAs
In response, the DOI representative clarified that the agent was referring to a Health Reimbursement Arrangement (HRA), and firmly stated, "The Department of Insurance DOES NOT regulate ERISA self-funded plans no matter how big or small the group". The DOI representative went on to say that the last thing the Illinois Department of Insurance wants to do is interfere with a federal program and the Department of Labor. Finally, the representative clarified that insurance agents are absolutely free to do HRA business in the state of Illinois.
Unfortunately for employees of Colorado small employers, the Colorado Department of Insurance insists that you pay income taxes on your individual insurance premiums.
Soon the Colorado DOI too will understand that they do not regulate HRAs. Coloradoans -- please write your state Senators, your Governor, and the Department of Labor....
Or, you could always move to Illinois.
Note: This should not be taken as legal or tax advice.