Continuing the furious pace with which it has been issuing health care reform guidance, the U.S. Department of Health and Human Services (HHS) has indicated that all health reimbursement accounts (HRAs) that were in effect before September 23, 2010, are exempt from the Patient Protection and Affordable Care Act’s prohibition against annual limits for plan years beginning on or after September 23, 2010, and before January 1, 2014.
Because an HRA is an account-based group health plan that limits a participant’s available reimbursement for a plan year to the value of his or her HRA account, it is virtually impossible for an HRA to comply with the annual limit prohibition.
Previously issued final regulations implementing the annual limit prohibition did not apply the prohibition to HRAs that were “integrated” with other group health plan coverage. Further, HRAs that are grandfathered or that provide only benefits to retirees or benefits excepted from the Act (e.g., limited-scope dental or vision plans) are not subject to the prohibition.
The remaining HRAs that had been subject to the annual limit prohibition are commonly referred to as “stand-alone” HRAs. Under the guidance provided by HHS, these HRAs now can continue being operated according to their terms through plan years beginning before January 1, 2014, provided they were in existence on or before September 23, 2010, even though the maximum reimbursement amount available to a participant for a plan year is limited to the value of a participant’s HRA account.