HRA rollover to next year - high dollar amount

[tertue]

Is there anything "wrong" with letting an HRA rollover to the next year. For instance, if yearly HRA is 5K, next year would be 10K, next year 15K....so that it could be tapped into for a really big medical expense.

Plan would be for a C Corp with only 1 employee. Participant may or may not have a health insurance plan in place or might be part of a healthcare sharing organization (like Medishare)..... therefore HRA would be acting as a self-insured plan. Basically wondering if there is a limit to how much an HRA can reimburse in a given year for medical expenses.

[Chaz]

This is generally permissible but arrangements such as these may go the way of the dinosaurs under PPACA's annual limit rules. We need guidance from the DOL/IRS/HHS on the treatment of stand-alone HRAs that are not excepted benefits, retiree plans, or FSAs.

[masteff]

In light of the above discussion, I found this of moderate interest. http://www.dol.gov/ebsa/pdf/1210-AB43-0074.pdf

[Chaz]

After writing this, I sat in a CLE today where a representative of Treasury basically put the kibosh on stand-alone HRAs. I would tread very carefully and consult with counsel before implementing or continuing such a program.

[tertue]

masteff....what does the document you linked to mean in everyday language?

[leevena]

After writing this, I sat in a CLE today where a representative of Treasury basically put the kibosh on stand-alone HRAs. I would tread very carefully and consult with counsel before implementing or continuing such a program.

This is the first I have heard about this, and could not find anything about it either. Are you sure the person was discussing all HRA's or just the use of HRA's to fund individual plans?

[masteff]

masteff....what does the document you linked to mean in everyday language?

It's a union plan in the situation your client would like to be in (HRA with full carry over year to year and they note that a participant can use 100% of their balance in any given year) that submitted comments to the DOL on the problem that Chaz is discussing.

[Chaz]

After writing this, I sat in a CLE today where a representative of Treasury basically put the kibosh on stand-alone HRAs. I would tread very carefully and consult with counsel before implementing or continuing such a program.

This is the first I have heard about this, and could not find anything about it either. Are you sure the person was discussing all HRA's or just the use of HRA's to fund individual plans?

Treasury is most concerned about using HRAs to fund individual policies but the representative seemed to take the position that any HRA not linked to a medical plan will be subject to PPACA's market reforms on annual and lifetime limits.

[leevena]

After writing this, I sat in a CLE today where a representative of Treasury basically put the kibosh on stand-alone HRAs. I would tread very carefully and consult with counsel before implementing or continuing such a program.

This is the first I have heard about this, and could not find anything about it either. Are you sure the person was discussing all HRA's or just the use of HRA's to fund individual plans?

Treasury is most concerned about using HRAs to fund individual policies but the representative seemed to take the position that any HRA not linked to a medical plan will be subject to PPACA's market reforms on annual and lifetime limits.

The way I understood stand-alone's is that they are permissable if there is a cap on the roll-over amount and you should keep long term care premiums out of it. Is this not true, or do you think it may be that there is so much confusion out there?

[masteff]

Did some more reading... DOL issued the following FAQ in January: http://www.dol.gov/ebsa/faqs/faq-aca11.html

In the 2nd part of Q-1, they address HRAs. They emphasize the distinction between "integrated" and "stand alone". They do not put any other qualifiers on "stand alone" plans. They do state that further guidance on HRAs is anticipated.