Notice 2013-54, Integration and Prevailing Wage

[Jeff Kirtner]

Background: A davis bacon/prevailing wage employer has for some years mades contributions to an HRA/VEBA and has taken prevailing wage credit for those contributions. Along comes Notice 2013-54. With exeptions not relevant in my situation, 2013-54 requires HRAs to be integrated with an insurance plan to avoid ACA annual limit prohibitions. To be integrated, 2013-54 requires the HRA to give participants the option to permanently waive future reimbursements (essentially forfeiting their account) each year and on termination of employment. I have questions about how the waiver/forfeiture interacts with davis bacon and similar prevailing wage laws.

Issue: Whether an employer can take prevailing wage credit for contributions it made to an HRA on behalf of an employee, if the employee voluntarily waives all future reimbursements (essentially voluntarily forfeiting those contributions)?

Does anyone have thoughts or guidance on this? Are there other examples where an employer can take prevailing wage credit for waived/forfeited amounts?

[GBurns]

I was not aware that an employee could waive or forfeit prevailing wage contributions. If they waive or forfeit, how does the prevailing wage be met?