Integrated HRAs and Dependent Coverage for Purposes of the Exemption from the ACA's Annual Limit Restriction

[Guest S. Nofziger]

Question regarding “Integrated HRAs” for purposes of the exemption from the annual limit restrictions under the ACA:

The recent Q&As under the January 24, 2013, FAQs about the Affordable Care Act Implementation (Part XI) that is available on the DOL’s website noted that an HRA is not considered “integrated” with and employer’s primary health coverage unless the HRA is available only to employees who are covered by the primary health plan (i.e., the employee must actually be enrolled in the primary coverage). What is left unsaid is the treatment of coverage for spouses and dependents—i.e., whether an employee must enroll their spouse and/or dependents in the primary health plan to receive reimbursements under the HRA for medical expenses incurred by the spouse and/or dependents.

Based on the statement that an employee must actually be enrolled in/covered by the primary coverage for the HRA to be considered “integrated” it would make sense that the same requirements would apply for spouses/dependents, but I have seen no clear guidance on this aspect. If such is the case, employees who select “employee-only” primary coverage could only receive HRA reimbursements for their own medical expenses, not for medical expenses incurred by their spouse and/or dependents. To do otherwise would run the risk that the HRA is not “integrated” because the spouse/dependents could receive HRA benefits (subject to an annual limit) but not primary coverage (which would be unlimited).

Has anyone seen any guidance on this?

Thanks!

Steve

[GBurns]

I do not follow your logic. The employee's coverage under the group health plan allows that employee to be eligible to receive the benefits from the HRA which are the expenses for that employee and eligible dependents. What does this have to do with primary coverage for the dependents?

Is this any different from the treatment of FSA reimbursements under a cafeteria plan?

[leevena]

It sounds like you are getting tripped up on the term employee, which is easy to do. Think of the HRA being used to fund certain reimbursable expenses within the medical plan. For example, the employer purchases a $10,000 deductible plan from an insured carrier and now self-funds the eligible expenses below the $10,000. The employer will usually have some type of plan design underneath the $10,000, for example it might be a $1,000 deductible, and then 80/20 of the remaining expenses. When presented to the employee for their enrollment, it appears as though it is one plan, so if the employee elects medical coverage they are electing the HRA and the fully insured plan. If the employee elects dependent coverage, those dependents are covered. The selection of "dependent coverage" by the employee is all that is needed to satisfy the rule.

Hope this makes sense. Good luck.