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Integrated HRA?


Guest PEMAQUID95
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Guest PEMAQUID95

We offer a stand alone HRA to employees who opt-out of company provided health insurance. I thought I read that the HRA would be permissible under ACA if it was "integrated" with other coverage, any coverage as long as the health plan complies with the rules. So if we modify our enrollment guidelines so that employees are required to show proof of other coverage (compliant coverage), would that allow our HRA to be permissible?

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Guest eliza

Yes, as long as the employee offers "proof" of other qualified converge, your HRA can be structured to then be integrated with the other employer plan and would meet the ACA requirements for integration. Notice 2013-54 actually covers this very topic in detail: This is pulled directly from the notice.

Integration Method: Minimum Value Not Required

An HRA is integrated with another group health plan for purposes of the annual

dollar limit prohibition and the preventive services requirements if (1) the employer

offers a group health plan (other than the HRA) to the employee that does not consist

solely of excepted benefits; (2) the employee receiving the HRA is actually enrolled in a

group health plan (other than the HRA) that does not consist solely of excepted

benefits, regardless of whether the employer sponsors the plan (non-HRA group

coverage); (3) the HRA is available only to employees who are enrolled in non-HRA

group coverage, regardless of whether the employer sponsors the non-HRA group

coverage (for example, the HRA may be offered only to employees who do not enroll in

the employer’s group health plan but are enrolled in other non-HRA group coverage,

such as a plan maintained by the employer of the employee’s spouse); (4) the HRA is

limited to reimbursement of one or more of the following—co-payments, co-insurance,

deductibles, and premiums under the non-HRA group coverage, as well as medical care

(as defined under Code § 213(d)) that does not constitute essential health benefits; and

(5) under the terms of the HRA, an employee (or former employee) is permitted to

permanently opt out of and waive future reimbursements from the HRA at least annually

and, upon termination of employment, either the remaining amounts in the HRA are

forfeited or the employee is permitted to permanently opt out of and waive future

reimbursements from the HRA. This opt-out feature is required because the benefits

provided by the HRA generally will constitute minimum essential coverage under Code

§ 5000A (see Q&A 10 of this notice) and will therefore preclude the individual from

claiming a Code § 36B premium tax credit.

Example (Integration Method: Minimum Value Not Required)

Facts. Employer A sponsors a group health plan and an HRA for its employees.

Employer A’s HRA is available only to employees who are either enrolled in its group

health plan or in non-HRA group coverage through a family member. Employer A’s

HRA is limited to reimbursement of co-payments, co-insurance, deductibles, and

premiums under Employer A’s group health plan or other non-HRA group coverage (as

applicable), as well as medical care (as defined under Code § 213(d)) that does not

constitute essential health benefits. Under the terms of Employer A’s HRA, an

employee is permitted to permanently opt out of and waive future reimbursements from

the HRA both upon termination of employment and at least annually.

Employer A employs Employee X. Employee X chooses to enroll in non-HRA

group coverage sponsored by Employer B, the employer of Employee X’s spouse,

instead of enrolling in Employer A’s group health plan. Employer A and Employer B are

not treated as a single employer under Code § 414(b), ©, (m), or (o). Employee X

attests to Employer A that he is covered by Employer B’s non-HRA group coverage.

When seeking reimbursement under Employer A’s HRA, Employee X attests that the

expense for which he seeks reimbursement is a co-payment, co-insurance, deductible,

or premium under Employer B’s non-HRA group coverage or medical care (as defined

under Code § 213(d)) that is not an essential health benefit.

Conclusion. Employer A’s HRA is integrated with Employer B’s non-HRA group

coverage for purposes of the annual dollar limit prohibition and the preventive services

requirements.

I hope this helps. We currently have a client with a similar HRA model in place. Make sure you remember to include the opt out option for employees in your plan docs.

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Guest PEMAQUID95

Wow, thanks Eliza! I needed that technical support! Do you know if it is my responsibility to determine or even ask if the "other coverage" is affordable or meets the minimum value requirement? Or does this not matter if we collectively employ less than 50 employees?

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Your concerns should be more directed towards your state small group/employer health insurance laws.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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  • 4 weeks later...
Guest PEMAQUID95

In Notice 2013-54, q&a 1 under the Guidance section states that ".... A group health plan, including an HRA, used to purchase coverage on the individual market is not integrated with that individual market coverage for purposes of the annual dollar limit prohibition." Since our HRA specifically excludes ANY premium from being reimbursed, does it comply? I am hearing that an HRA can remain intact if the employee is enrolled in other coverage that is employer sponsored (i.e., through a spouse) but it cannot remain intact if the employee purchases coverage in the individual market because it would make them ineligible for any subsidy. Is this true even if our plan does not permit reimbursement of any premium?

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Guest PEMAQUID95

Also, Q4 refers the reader to Q10 stating that the permanent opt out feature is necessary because an HRA will generally constitute minimum essential coverage, thus precluding the individual from claiming a tax credit. When I read Q10 all it talks about is coverage with fewer than 2 participants. Our plan covers 15 participants, presently.

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