On September 13, the Department of Labor (DOL) and the Internal Revenue Service (IRS) issued guidance clarifying how the Patient Protection and Affordable Care Act (PPACA) applies to Health Reimbursement Arrangements (HRAs), Health Care Flexible Spending Arrangements (FSAs), and certain other types of plans.
This guidance confirms and clarifies prior guidance. Key provisions include:
HRAs for Active Employees – For plan years beginning in 2014, employers cannot offer a stand-alone HRA to employees. Employers can only offer HRAs that are integrated with a group health plan.
Integrated HRAs – For an HRA to be integrated with a group health plan, the following requirements must be met:
- The HRA is only available to employees enrolled in group coverage;
- The employer must offer a group health plan that provides minimum value or that does not consist solely of excepted health benefits.
- The employee must be enrolled in a group health plan (either the employer’s plan or another plan such as coverage through a spouse);
- If the group health plan is self-insured and does not cover certain Essential Health Benefits (EHBs), the HRA cannot be used to reimburse EHBs that are not covered by the group health plan; and
- The employee can waive future reimbursements from the HRA at least annually, and the remaining amounts in the HRA are forfeited if employment ends.
Retiree HRAs – A stand-alone retiree HRA that is used to pay health insurance premiums will be considered an employer-sponsored group health plan providing minimum essential coverage. As a result, a retiree covered by an HRA will not be eligible for premium tax credits through the Marketplace/Exchange.
FSAs – A health care FSA does not have to comply with PPACA if:
- The employer also offers group health plan coverage; and
- The maximum annual FSA benefits payable to any employee do not exceed two times the employee’s contribution (or, if greater, do not exceed $500 plus the employee’s contribution).
Employer Payment Plans – Employers may not reimburse an employee’s premiums or pay premiums directly to an insurance company to purchase individual health insurance for an employee.
EAPs – An employee assistance program (EAP) will generally be considered not subject to PPACA market reforms, provided that the EAP does not provide significant medical care benefits.
For more details, here is a link to the guidance: