Health Care Reform FAQs Address HRAs

Last week, the DOL, HHS, and Treasury jointly issued the 11th set of FAQs relating to health care reform.  In addition to delaying the employer Notice of Health Insurance Exchanges, which we addressed in a recent post,  the FAQs discussed a few other matters, including certain issues relating to health reimbursement arrangements (HRAs).

As discussed in an earlier post, there have been many questions about how HRAs (which by their nature limit the amount of benefits in a given year to a participant’s current HRA balance) will be able to comply with PPACA’s prohibition on annual dollar limits on “essential health benefits,” which starts in 2014.  Although the interim final regulations on annual limits explicitly exempt HRAs that are “integrated” with other coverage as part of a group health plan as long as the other coverage would comply on its own, there has been some uncertainty over which HRAs would be considered “integrated” with other coverage. 

In questions 2-4 of the FAQs, the agencies stated that they anticipated issuing the following future guidance relating to HRAs:

1)      An employer-sponsored HRA cannot be integrated with individual market coverage or with an employer plan that provides coverage through individual policies

2)      An employer-sponsored HRA may be treated as integrated with other coverage only if the employee receiving the HRA is actually enrolled in that coverage.

3)      An HRA will not fail to comply with the 2014 prohibition on annual dollar limits if it permits the reimbursement of medical expenses by an HRA after December 31, 2013, that is credited with amounts before January 1, 2014, that consist of: 

  • amounts credited before January 1, 2013, and
  • amounts that are credited in 2013 under the terms of an HRA as in effect on January 1, 2013

4)      If the HRA terms in effect on January 1, 2013, did not prescribe a set amount or amounts to be credited during 2013 or the timing for crediting such amounts, then the amounts credited may not exceed those credited for 2012 and may not be credited at a faster rate than the rate that applied during 2012.

Today’s post was contributed by Cynthia Y. Lee

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