Since the passage of Health Care Reform, we have kept close watch on the treatment of Health Reimbursement Accounts (HRAs) and what will be considered an “Integrated HRA.” Understand the difference and if your HRAs will survive healthcare reform in 2014 and beyond.
Background
Under Health Care reform legislation (specifically PHS Act section 2711), health plans and insurers are prohibited from imposing lifetime or annual limits on the dollar value of essential health benefits. As a health plan, an HRA is also subject to these new limitations. Interim guidance indicated “integrated HRAs” may be offered as long as the integrated health plan meets the health plan requirements and does not impose lifetime or annual limits. Limited Purpose HRAs (for dental and vision) and Retirement HRAs are exempt from the requirements. However, it also indicated that “stand alone HRAs” which provided a fixed dollar benefit would not be eligible plans since they provide a fixed dollar benefit.
Latest Guidance
Recent guidance provides clarification and guidance on when an HRA will be considered an “Integrated HRA” and therefore be an eligible health plan. For the complete documentation, visit the Department of Labor.
Here are a few key questions answered (paraphrased from January 24, 2013 FAQ release from Department of Labor)
Q2: May an HRA used to purchase coverage on the individual market be considered integrated with that individual market coverage to satisfy requirements?
No. An employer-sponsored HRA cannot be integrated with individual market coverage or with an employer plan that provides coverage through individual policies.
Q3: If an employee is offered coverage that satisfies the requirements but does not enroll in that coverage, may an HRA provided to that employee be considered integrated with the coverage and therefore satisfy the requirements?
No. 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. Any HRA that credits additional amounts to an individual when the individual is not enrolled in primary coverage fails to comply with requirements.
Q4: How will amounts that are credited or made available under HRAs under terms that were in effect prior to January 1, 2014, be treated?
Future guidance is anticipated to clarify whether or not an HRA is integrated with other group health plan coverage, unused amounts credited before January 1, 2014, consisting 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 may be used after December 31, 2013 to reimburse medical expenses in accordance with those terms without causing the HRA to fail to comply with PHS Act section 2711. 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.
If you have concerns about an existing HRA, you may contact ImpServices@BenefitResource.com. Benefit Resource will also be reaching out to clients over the next six months to discuss any plans that may not qualify beginning January 2014.
