10 Oct New Guidance on HRAs and Premium Reimbursement Arrangements
Originally posted October 08, 2013 by United Benefit Advisors (UBA)
On Sept. 13, 2013, the IRS issued Notice 2013-54, which includes details on permissible health reimbursement arrangements (HRAs), provides some clarification on minimum essential, minimum value and affordable coverage, and addresses payment of individual premiums through an employer-provided plan.
- It is integrated with a group medical plan that does not have dollar limits and that provides first-dollar benefits for preventive care,* or
- The HRA only provides “excepted benefits” such as standalone dental or vision, or
- The HRA only covers retirees.
- The HRA must only be available to employees who are actually enrolled in group medical coverage (either through the employee’s or a family member’s employer); and
- The employee receiving the HRA must actually be enrolled in a group medical plan (either through the employee’s or a family member’s employer); and
- The HRA must be written to give the employee the opportunity at least annually to permanently decline participation in the HRA, and when employment terminates the employee must be allowed to permanently decline participation in the HRA or the balance must automatically be forfeited at termination.
- A person with minimum essential coverage does not have to pay an individual shared responsibility/individual mandate penalty.
- A person with minimum essential coverage is not eligible for a premium subsidy through the health marketplace/exchange.
- Beginning in 2015, a large employer (one with 50 or more full-time or full-time equivalent employees) must offer minimum essential coverage to at least 95 percent of its employees or pay a penalty of $2,000 per year per full-time employee.
- If the HRA may only be used for cost-sharing (reimbursing the deductible, copays, and/or coinsurance), current year HRA contributions may be used when calculating the plan’s minimum value.
- If the HRA may be used to reimburse premiums, or to pay both premiums and cost-sharing, current year HRA contributions may be used when deciding if the group medical plan is affordable.