Any employer who has Health Reimbursement Arrangements (HRAs) needs to take time to review its employee benefit plans to ensure the plans satisfy current requirements under the Affordable Care Act (ACA).
HRAs Generally:
HRAs are generally subject to the Employee Retirement Income Security Act (ERISA). These types of plans are used to reimburse employees for certain medical expenses and are exclusively funded by employers. Prior to the passage of the ACA, HRAs provided employees an opportunity to seek reimbursement up to a certain dollar amount over a certain period of time. Depending on the terms of the plan, some employers allows these funds to roll over as well.
HRAs & the ACA:
However, the ACA contained two provisions that the U.S. Departments of Labor (DOL), Health & Human Services (HHS), and Treasury (IRS) have determined require changes to many HRAs. The ACA provisions (1) prohibited group health plans from placing annual dollar limits on essential health benefits as of January 1, 2014; and (2) require group health plans to provide certain preventive health services without imposing any cost-sharing.
The Agencies recently issued guidance stating that HRAs are subject to these ACA requirements and stand-alone HRAs do not satisfy either of these requirements. The Agencies have stated that HRAs must be “integrated” with group health plans that independently satisfy ACA requirements. Finally, HRAs may no longer be used in conjunction with individual health plans.
Integration:
There are two methods of integrating HRAs into a group health plan which depends on whether minimum value is required. However, no matter what type of group health plan exists, employers will most likely be required to revise the plan documents to comply with the new guidance.
What Does an Employer Need To Do:
Employers should immediately review their benefit plans. If the employer offers a stand-alone HRA plan, they should determine whether to integrate the HRA with a group health plan. This may require significant changes, and employers may choose to terminate the HRA plan depending on the circumstances.
Please contact our offices if you have additional questions or comments.