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Hello, Our group plan carrier messed up and failed to enroll an employee back in April when we submitted her application. However, because we didn't know that until September, she has been enrolled on our group HRA since April. So, we were/are out of compliance for the five months she was not covered by our group health plan. The carrier has since enrolled her onto our health plan as of 9/1, but our broker doesn't think they will consent to back-enrolling to April. If they don't, what do you think we should do? Fortunately, she didn't have any medical claims until September, but she did use her HRA for some dental/vision charges prior to September. We would like to make the employee whole, since it wasn't her fault, and ideally get back into compliance. Should we: Report her HRA employer contributions as taxable for those five months she was not covered and give her a bonus to cover the taxes; Reset her HRA active status date to 9/1 and give her a (taxable) bonus to cover the HRA contributions for those five months; Not even bother asking the carrier to back-enroll her to April and just ignore the fact she was not covered by our group plan for five months (what are the risks here?); Or something else? Of course, if the carrier won't back-enroll her to April, we will also reimburse her premium payroll deductions. Thanks for any advice!

I have received an inquiry regarding drafting a QDRO for a health reimbursement account (HRA), which is covered by ERISA, but can't find any resources for this online. Has anyone come across this before?

We have an employee whose last day of work occurred mid-September. He was participating in both our group health plan and our HRA. He remains covered by the health plan through the end of the month. The question is if he is also covered by our HRA during that time? In our plan adoption agmt, we have one clause that states that "an Employee is eligible to participate in the Plan under the same terms and conditions as under the Company benefit plan" - and our group health plan is then specified as the "Company benefit plan". However, later in the agmt, we have another clause that specifies "Permit Eligible Employees to participate in the Plan after Termination" and the "No" box is checked. So our TPA is saying that the ex-employee's access to his HRA ends on his last day of work (or technically, the next day). But that seems to conflict with the first clause and in addition, it seems, shall we say, asymmetrical to allow an ex-employee to continue to accrue expenses under the health plan, while denying him access to the HRA at the same time. I am not sure which clause should take precedence or whether it is up to us, as the plan administrators, to override our TPA's interpretation if we so wish. Or should we just check with an ERISA lawyer... Thanks in advance!

We mostly administer HRA plans for terminated employees for employers that use Hour Banks or prevailing wages. The money is fringe dollars and does not belong to the employer as normal. We have a plan that has one employee left on the plan and the employer wants to terminate the plan. The employee still has $259. What should be our process for this? Give the money back to the employee in a check? The employee has a debit card to spend the money but has not used it yet. Our big problem is the employees move so often we do not always have a current address.

I’ve helped put together this research explaining the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) and how it works for employees in various circumstances. Has anyone run into any other situation not included in this eBook that would be helpful to add?

I have a client with a Group Health Plan that has experienced excessive utilization with their Drug Card program. A solution being considered is to offer a Base Plan with Generic only, and let those who desire it Buy Up to the plan with Broader Drug Card Coverage. The company funds a $1000.00/year Health Reimbursement Plan that allows the assets to accumulate in each participants account. I am seeking a solution that would allow the $1000.00 being contributed currently, to a plan that will allow the employees to allocate that towards their portion of their employee premium if they choose. It that possible?

Can an employer contribute to an HRA on behalf of active employees and prohibit benefits from being used until the participant reaches retirement age? Would this fall under the retiree-only exemption?

Does anyone have any ideas as to what the proper correction would be under 4980D(f)(3) for credits made to a non-integrated HRA? It is clear from the IRS, DOL, and HHS guidance that a non-integrated HRA will fail to comply with the annual dollar limit prohibition and preventive services requirements. If a plan sponsor (in the multiemployer plan context) makes credits to an HRA account and then later finds out the individual was not enrolled in a group health plan (rendering the HRA account "non-integrated"), what could be done to correct and avoid being slapped with the $100 per day/per individual excise tax penalty? 4980D(f)(3) states that: (3) Correction A failure of a group health plan shall be treated as corrected if— (A)such failure is retroactively undone to the extent possible, and (B)the person to whom the failure relates is placed in a financial position which is as good as such person would have been in had such failure not occurred. My thoughts: 1. The sponsor could "un-credit" the amount credited to the HRA. This addresses subsection (A) regarding the retroactive "undoing" of the failure. But what about (B)? If the plan also has an FSA feature, presumably the employer could "re-credit" the amount to the FSA, which should place the individual in as good a position they would have been under the HRA (no tax recognition, can reimburse eligible medical expenses, potentially a rollover feature). And if the plan doesn't have an FSA option?... 2. The sponsor could un-credit the HRA, turn around and give that amount to the employee after-tax and gross up his or her wages. 3. The noncompliance period under 4980D(b)(2) would run from the date the individual had both credits to his or her HRA account and was not enrolled in a group health plan, and would end on the date the HRA was un-credited and the employee was made whole. 4. The sponsor could potentially take advantage of the reasonable diligence exception under 4980D©(1) if it required employees to fill out an attestation form certifying that they are enrolled in group health plan coverage. If the employee is not enrolled in the sponsor's coverage, what more should the sponsor be expected to do to exercise reasonable diligence in knowing the failure (i.e., not being enrolled in GHP coverage) exists?

I have a client setting up an HRA plan who wants to exclude those under age 25. It looks like this is OK under 105(h). However, she has somebody else saying the limit is 21 because of ERISA. I think she is looking at retirement plan not health plan so the 21 does not apply. Is there a link to the age 21 for an ERISA HRA?

It just keeps getting more interesting. I'd love anyone's thought on the following, which relates to the intersection of the new world of the Affordable Care Act and Health Reimbursement Accounts (HRAs). Here's what I know: 1. HRAs, to comply with the ACA, must be 'integrated' with the health plan. 2. Stand-alone HRAs are out - unless its a retiree-only HRA. I have clients (public sector) who have an Active Employee (integrated) HRA (employer makes contributions to active employees) AND a retiree-only (stand alone) HRA (employer makes specified contributions for a limited number of years to retirees. Here's the the @#%# hits the fan: Client may want to rehire a retired individual (who still receives the retiree HRA contribution in the retiree-only HRA account) for part-time work. In the re-hired position, the individual is eligible for the active employee HRA contribution. Some vendor/promotor types, locally, are scaring a lot of employers by pointing out the conflict here, and saying that the active-employee HRA made for the retiree will "blow up the retiree HRA" (which, if it is not for retirees-only [by receiving a contribution for an 'active', does not satisfy the ACA). I believe that an assumption is being made here that there is only one HRA and that an active-employee's HRA is 'converted' into a retiree-only account when someone retires. In actuality, I believe that we should actually be talking about two separate HRAs here: one for actives (integrated) and one for retirees. Contributions make to a retiree should go into a literally different/segragated account than for when the person was active. Additionally, I would think that the 'problem can be addressed' by adopting a rule under which a person is eligible for only one type, but not both types, of HRA contribution at a time. (Maybe freeze the retiree HRA contribution while the person is a rehired active. Alternately, perhaps the rehired person could simply receive both types of contributions at the same time, so long as the active-portion goes into the active sub-account and the retiree portion goes into the retiree sub-account. (The person did, after all, attain 'retirement' status at some point, and barring plan language to the contrary, arguably remains entitled to a retiree contribution). Hmmmmm..... I imagine this is an area where we'll see more regulation/guidance, but for now - it provides a window for local trouble makers to rattle the nervous employers. Sigh.

I recently read that an HRA will have to comply with this fee. We offer an HRA in lieu of health insurance, like an opt-out benefit to our employees. The document I read indicated that the fee is $1 per covered beneficiary and is due July 31, 2013. Does anyone have any experience or expertise on this?

Question regarding the exclusion for “Health FSAs” for purposes of the exemption from the annual limit restrictions under the PPACA: The interim final regulations governing the lifetime and annual limits under the PPACA include an exception for Health FSAs under IRC 106©(2). See Treas. Reg. 54.9815-2711T(a)(2)(ii). IRC 106©(2) defines a Health FSA as a benefit program under which specified medical expenses may be reimbursed and the maximum amount of reimbursement reasonably available to a participant is less than 500% (5x) the value of such coverage. While there is no clear IRS guidance on how to determine the “value” of coverage under an HRA/Health FSA, the “value” of coverage is generally presumed to be equal to the plan’s average per-participant reimbursement amount (i.e., the average claims cost per participant). For example, if an HRA has 10 participants, a maximum reimbursement of $2,000, and $4,500 in claims during the plan year, it is typically considered to be a Health FSA because the maximum reimbursement of $2,000 is less than 5x the presumed $450 per-participant claims cost—i.e., the “value” of coverage. My question is this: Does anyone have any guidance on how “value” of coverage may be affected if an HRA will reimburse the purchase of health insurance premiums (not just medical expenses)? Arguably, if health insurance premiums can be reimbursed, the “value” of the HRA coverage would be more than just the plan’s average per-participant reimbursement amount or even the plan’s maximum benefit amount, because participants can purchase insurance that will pay for larger amounts. Does anyone have guidance or thoughts on this? Thanks! Steve

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

(Pardon the multiple postings of this question, but I couldn't determine which forum it best fit under.) 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

(Pardon the multiple postings of this question. I couldn't determine which forum it best fit under.) Question regarding the exclusion for “Health FSAs” for purposes of the exemption from the annual limit restrictions under the PPACA: The interim final regulations governing the lifetime and annual limits under the PPACA include an exception for Health FSAs under IRC 106©(2). See Treas. Reg. 54.9815-2711T(a)(2)(ii). IRC 106©(2) defines a Health FSA as a benefit program under which specified medical expenses may be reimbursed and the maximum amount of reimbursement reasonably available to a participant is less than 500% (5x) the value of such coverage. While there is no clear IRS guidance on how to determine the “value” of coverage under an HRA/Health FSA, the “value” of coverage is generally presumed to be equal to the plan’s average per-participant reimbursement amount (i.e., the average claims cost per participant). For example, if an HRA has 10 participants, a maximum reimbursement of $2,000, and $4,500 in claims during the plan year, it is typically considered to be a Health FSA because the maximum reimbursement of $2,000 is less than 5x the presumed $450 per-participant claims cost—i.e., the “value” of coverage. My question is this: Does anyone have any guidance on how “value” of coverage may be affected if an HRA will reimburse the purchase of health insurance premiums (not just medical expenses)? Arguably, if health insurance premiums can be reimbursed, the “value” of the HRA coverage would be more than just the plan’s average per-participant reimbursement amount or even the plan’s maximum benefit amount, because participants can purchase insurance that will pay for larger amounts. Does anyone have guidance or thoughts on this? Thanks! Steve