Employer-sponsored heath benefit plans have been the primary source of health insurance for generations of Americans. However, account-based plans at times have been inflexible and inaccessible to many people in need of coverage. On October 23, 2018, the Internal Revenue Service (IRS) published Notice 2018-88 in conjunction with the Department of the Treasury, the Department of Labor, and the Department of Health and Human Services (collectively, the “Departments”). In Notice 2018-88, the IRS proposed new regs for account-based group health plans. In response, the American Benefits Council (the “Council”) submitted its comments on the proposed regulations on December 28, 2018. In this article, we will look at the Council’s response.
The American Benefits Council’s General Response
The Council noted its appreciation at being given the opportunity to publicly address the proposed regulations for account-based group health plans.
A public policy organization, the Council is concerned about helping employers develop benefit plans for their employees. Generally, the Council supports increased availability of Health Reimbursement Arrangements (HRAs), which in turn increases flexibility for employers and employees.
In addition, the Council feels the individual insurance market must be stable for the integration of group health plan coverage with individual-market based plans to work. Generally, it is felt that the Proposed Rule will make HRAs more usable but could also lead to increased enrollment in insurance coverage due to the cost savings.
Requests Regarding the Proposed Rules
The Council, while supporting many of the proposed rules, also requested the following:
- More flexibility in permissible classes to encourage employers to offer Individual Coverage HRAs (ICHRAs).
- That the IRS supply a model notice to guide employers and that satisfies the Proposed Rule and can be submitted electronically.
- Clarification on how cafeteria plans could help pay for individual health insurance coverage
- Guidance on participant HSA-eligibility.
- Clarification that excess ICHRA funds may be used to pay all medical expenses.
- Guidance regarding Medicare anti-duplication and secondary payer rules as they apply to an ICHRA.
Requests and Comments Regarding Notice 2018-88
In addition, the Council weighed in on the IRS notice regarding the proposed rules:
- Requested guidance that clarifies the date an ICHRA is effectively offered by the employer, under most circumstances.
- Asked for guidance regarding affordability using a nationwide baseline.
- Asked for specific examples showing how the rules might work when they become effective.