The IRS, DOL and HHS (collectively, Departments) issued guidance addressing the impact of the ACA on HRAs.
Integrating HRAs with Individual Coverage.This guidance codifies the prior position of the Departments that HRAs and other types of group health plans cannot be used to purchase coverage on the individual market. Under this guidance, an employer payment plan pursuant to which an employer reimburses or directly pays employee premiums for individual health insurance policies and excludes those amounts from taxable income (such as an HRA) will fail to satisfy the ACA's prohibition on annual dollar limits.
This guidance also states that an employer plan that offers the employee the choice between cash and an after tax amount could be used to purchase individual health insurance without violating the ACA.
The guidance would also permit a stand-alone HRA offered as a retiree-only plan. The guidance confirms that a stand-alone HRA for retirees is still considered minimum essential coverage. Consequently, retirees who have not yet reached age 65 may use an HRA to satisfy the individual mandate under the ACA, but those retirees will not be eligible to receive a premium tax credit if they purchase insurance on the exchanges.
Integrating HRAs with a Group Health Plan. This guidance also clarifies when an HRA will be considered "integrated" with a group health plan such that the HRA does not violate the ACA's prohibition on annual limits. Different requirements apply, depending on whether the group health plan provides minimum value.
If the HRA is paired with a group health plan that does not provide minimum value, the HRA will be considered integrated with the group health plan if:
The employer offers (does not need to sponsor) a group health plan that does not solely consist of excepted benefits (the Group Plan).
- The employee receiving the HRA is actually enrolled in the Group Plan.
- The HRA is only available to employees enrolled in the Group Plan.
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The HRA is limited to reimbursing one or more of the following:
- co-payments;
- co-insurance;
- deductibles; and
- premiums under the Group Plan or medical care that does not constitute essential health benefits.
- The employee is permitted at least annually to permanently opt out of, and waive, future reimbursements from the HRA.
If the HRA is paired with a group health plan offered (not necessarily sponsored) by the employer that provides minimum value, the HRA will be considered integrated with the group health plan if:
- The employee receiving the HRA is offered and is actually enrolled in a group
- health plan.
- The HRA is only available to employees enrolled in that group health plan.
- The employee is permitted at least annually to permanently opt out of, and waive, future reimbursements from the HRA.
