Grandfathered Plan vs Health FSA meeting the Excepted Benefit/Avalability Condition

[bcspace]

Can someone discuss what may or may not be required for Cafeteria Plan to qualify as a Grandfathered Plan relative to a Health FSA within the Plan having to qualify as an Excepted Benefit; specifically the Availability Condition (requirement to offer Major Medical in addition to a Health FSA)?

What more might be needed than to document that the Cafeteria Plan was in existence on March 23, 2010 and make that clear to the participants?

Have come across several small employers who have offered a Cafeteria Plan for many years but cannot afford to offer Group Health and of course the Excepted Benefit requirement and Availability Condition now currently in effect.

Thanks

[GBurns]

I was not aware that a Cafeteria Plan or a HFSA within the Plan could be "grandfathered".

What does 2010 have to do with it?

It is not the Cafeteria Plan or the HFSA that must qualify as an "Excepted Benefit".

From Technical Release 2013-02:

"Coverage provided through Code § 125 plans, employer payment plans, health FSAs, and HRAs are eligible employer-sponsored plans and, therefore, are minimum essential coverage, unless the coverage consists solely of excepted benefits. See Code § 5000A(f)(2) and Treas. Reg. §1.5000A-2, 78 Fed. Reg. 53646, 53658 (August 30, 2013)."

[bcspace]

2010 is the date of the law's enactment.

I was studying the EBIA Cafeteria Plans manual I receive for help on this issue and I am referring to some interesting statements such as:

"Most of these mandates do not apply to group health plans that are “excepted benefits.”71 Most health FSAs will qualify as excepted benefits; beginning in 2014, health FSAs generally must qualify as excepted benefits in order to comply with health care reform.72 See subsection K for the requirements that must be met for health FSAs to qualify as excepted benefits. In addition, health care reform includes a rule for “grandfathered health plans,” under which some of these mandates do not apply to certain plans that were in existence on the law’s date of enactment (March 23, 2010).73 Note also that guidance is still needed on the application of some aspects of health care reform (e.g., automatic enrollment; see Section XVII)."

"Caution Regarding Changes to Code. Health care reform also made changes to the Code that apply to all health FSAs, whether or not they are excepted benefits or grandfathered health plans. These changes include restrictions on over-the-counter (OTC) medicine and drug reimbursements, Form W-2 reporting of the cost of employer sponsored health coverage, a $2,500 limit (indexed for inflation) on annual salary reduction contributions to health FSAs offered under cafeteria plans, and a tax on highcost health coverage, all of which are discussed throughout this manual."

"Under the health care reform law, group health plans that had at least one participant on March 23, 2010 and meet certain requirements are “grandfathered health plans” and are not subject to some of the law’s requirements. PPACA, Pub. L. No. 111-148, § 1251 (2010);Treas. Reg § 54.9815-1251T; DOL Reg § 2590.715-1251; HHS Reg. § 147.140."