A new set of Q&As provides additional guidance regarding how the prohibition on annual dollar limits and the requirement to cover preventive services under Health Care Reform apply to health reimbursement arrangements (HRAs) and certain other employer healthcare arrangements. The following are key highlights that may be of interest to employers:
- A group health plan, including an HRA and an employer payment plan, cannot be integrated with individual market coverage.
- An HRA or employer payment plan used to purchase coverage on the individual market will therefore fail to comply with the annual dollar limit prohibition and the preventive services requirements.
- An HRA that is integrated with a group health plan will generally comply with the annual dollar limit and preventive services requirements if the group health plan with which the HRA is integrated complies with those requirements.
- An HRA will be integrated with a group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements if it qualifies under either of two integration methods described in the Q&As.
- A health flexible spending arrangement (FSA) that does not qualify as excepted benefits is not integrated with a group health plan, and thus will fail to meet the preventive services requirement.
- Effective retroactively as of September 13, 2013, a health FSA that is not offered through a cafeteria plan (a plan which meets specific requirements to allow employees to receive certain benefits on a pre-tax basis) is subject to the annual dollar limit prohibition and will fail to comply with this requirement.
- Effective for taxable years beginning after December 31, 2013, an employer is prohibited from providing a qualified health plan offered through a Health Insurance Exchange as a benefit under the employer’s cafeteria plan.
The agency guidance applies for plan years beginning on or after January 1, 2014, with certain exceptions, but may be applied for prior periods. Visit our section on HSAs, FSAs, & Other Tax-Favored Plans for more information on these types of arrangements.