Is a Qualified Small Employer Health Reimbursement Arrangement an ERISA-governed welfare plan?

[Peter Gulia]

If an employer's arrangement to reimburse an eligible employee's payment of a premium for an individual health insurance contract follows all the rules and conditions for a qualified small employer health reimbursement arrangement ["QSEHRA"] described in Internal Revenue Code section 9831(d), the arrangement is not a group health plan for ERISA section 607(1) or 733(a)(1).

But do other ERISA issues remain?

Does the employer's reimbursement of its employee's premium paid for individual health insurance make the arrangement a welfare plan defined in ERISA section 3?

Must a QSEHRA be stated by a written plan?

Must a QSEHRA's administrator furnish a summary plan description?

Must a QSEHRA's administrator adopt and follow a claims procedure?

What further issues should we think about?

 

[Flyboyjohn]

"Yes" to the first 5 questions.

With respect to "other issues" hopefully the plan sponsor won't set up a trust so these plans will be exempt from 5500 filings as small unfunded welfare plans.

 

[Peter Gulia]

Just to set up a "devil's advocate" argument:

EBSA's Field Assistance Bulletin 2004-01, describing some reasoning for its interpretation that an employer-provided contribution to a Health Savings Account neither establishes nor maintains a plan, says:

Because of these differences, we regard court precedent on the significance of employer contributions to group or group-type insurance arrangements as inapposite to HSAs.  In the group health insurance context, the employer, whether by choosing an insurance policy or creating a self-funded program, typically establishes the type of benefits provided, the conditions for their receipt, and the manner in which claims will be adjudicated.  In the context of HSAs, however, the employer may be doing little more than contributing funds to an account controlled solely by the employee.

If an employer does no more than reimburse a premium an employee paid to buy, voluntarily, individual health insurance of the employee's choosing, does such an employer do anything to "establish" the health-coverage benefits to be provided?  Or did the individual choose the health-coverage benefit?

[Flyboyjohn]

To play "angel's advocate" I would suggest answering your questions by viewing the QSEHRA as simply a variation of a traditional health reimbursement arrangement. The statement in the statute that a QSEHRA is not a "group health plan" shouldn't be extended to say it's not an employee welfare benefit plan under ERISA section 3.

Should an HRA have a plan document and SPD (with claims procedure)? I believe so.

Does an HRA provide an aggrieved participant ERISA rights and legal recourse in Federal court? Again I believe so.

Lastly, the specific statutory requirement to provide an annual Notice should not be interpreted as providing a free pass on the normal plan document and SPD requirements.

[Peter Gulia]

Yup, I concur with those two reasons for finding an ERISA-governed plan.

Also, I think FAB 2004-01 is incorrect, even under the particular facts it assumes.