Standalone HRA's?

[Belgarath]

Re HRAs without a group health insurance plan; is that allowed under the Affordable Care Act (ACA)? My (limited) understanding is that standalone HRAs were not permitted under ACA.

Are there exceptions for complying with ACA; e.g., employers with fewer than 10 employees are not required to comply with Regulations under ACA and; therefore, could sponsor a standalone HRA?

This question came up, and I wasn't sure if perhaps the answer might vary by state?

Thanks.

[GBurns]

Even if ACA is not applicable, almost every state has prohibitions against an employer reimbursing an employee. This is also prohibited by the terms of the individual health policy and almost every major carrier states this very clearly on the application.

The DoL has issued many notices etc over the years stating that an HRA of any sort constitutes a group health plan. This would cause the entire arrangement including the individual health policies to fall under state group health laws thereby bringing us back to to the first issue.

[Belgarath]

Thanks George. Turns out this client is in Florida - don't know if that makes any difference. This isn't something I deal with, so I know very little about it - probably not even enough to be dangerous. The person asking about it isn't a client, so we have no involvement other than trying to point him in the right direction. It seems that he would like to ditch his group health insurance (as of January will have only 3 employees) and set up an HRA instead, but we're under the impression that it is an idea that won't fly.