New Guidance on Health Care Reform Rules for HRAs & Other Arrangements

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.

2014 Contribution Limits and Minimum Deductibles for Health Savings Accounts

The IRS has released the 2014 inflation adjusted amounts for health savings accounts (HSAs). To qualify for an HSA, an individual must be covered under a high deductible health plan (HDHP) and meet certain other eligibility requirements.

HSA Basics
An HSA may receive contributions from an eligible individual or any other person, including an employer or a family member, on behalf of the individual. Contributions, other than employer contributions, are deductible on the eligible individual’s return. Employer contributions are not included in income. Distributions from an HSA that are used to pay qualified medical expenses are not taxed.

Annual Contribution Limitation
For calendar year 2014, the annual limitation on HSA deductions for an individual with self-only coverage under an HDHP is $3,300. The annual limitation on HSA deductions for an individual with family coverage under an HDHP is $6,550.

High Deductible Health Plan
For calendar year 2014, a ‘high deductible health plan’ is defined as a health plan with an annual deductible that is not less than $1,250 for self-only coverage or $2,500 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,350 for self-only coverage or $12,700 for family coverage.

You can read more about HSAs in our section on Health Savings Accounts.

New Model Exchange Notices — Distribute to Employees No Later Than October 1, 2013

New Model Forms Released: Health   Insurance Exchange Notices and Revised COBRA Election Notice

Employers and group health plan   administrators will want to download new   model notices released by the U.S. Department of Labor (DOL) to   comply with changes as a result of Health Care Reform.

New Model Exchange Notices —   Distribute to Employees No Later Than October 1, 2013
Following a delay in the original effective date, employers need to comply   with the new requirement to provide employees a written notice with   information about a Health Insurance Exchange (Marketplace) beginning this   fall. Two separate notices are available from the DOL:

  • Model Notice for Employers Who Offer a        Health Plan to Some or All Employees
  • Model Notice for Employers Who Do Not        Offer a Health Plan
Employers are required to provide   the written notice to each current employee not later than October 1, 2013,   and to each new employee at the time of hiring beginning October 1, 2013 (a   notice will generally be considered to be provided ‘at the time of hiring’ if   it is furnished within 14 days of an employee’s start date).

Employers must provide the notice   automatically and free of charge to each employee, regardless of plan   enrollment status or of part-time or full-time status. The notice may be   distributed by first-class mail, or electronically if certain requirements   are met. Employers do not need to provide a separate notice to dependents or   other individuals who are or may become eligible for coverage under the plan   but who are not employees.

Updated Model COBRA Election   Notice
A revised Model COBRA Election Notice is now available   for group health plans subject to federal COBRA to inform eligible   employees and dependents of the right to continue coverage and how to make an   election when a qualifying event occurs.

COBRA generally requires plan administrators to provide eligible   individuals (called ‘qualified beneficiaries’) an election notice within 14   days after receiving notice of a qualifying event. The updated model notice   includes additional information for qualified beneficiaries who may want to   consider and compare health coverage alternatives to COBRA that will be   available through the Health Insurance Exchanges (Marketplaces), which are   expected to begin operating in 2014.

Check out our Group Health Plan Notices Calendar for   information on other notice requirements and to download additional model   notices.

If I’m on Medicare will my benefits change?

Those individuals who are Medicare age now or will be in the near future will see benefits expand slightly under a basic package of Medicare benefits. Let’s start with prescription drugs, or what is known as Part D. At the end of August nearly 1 million Medicare beneficiaries received a $250 check to help bridge the coverage gap, or what is better known as the “doughnut hole”. This is the gap in Part D coverage where beneficiaries must pay the full cost of their prescriptions until the catastrophic coverage kicks in. Starting in 2011, beneficiaries will receive 50 percent discounts on brand name drugs and 7 percent discounts on generic drugs while they’re in the coverage gap. The new health law is scheduled to close the gap entirely by 2020. Beginning in 2011 the new changes to health care also state that Medicare beneficiaries won’t have to pay co-payments or deductibles on many preventive health care services, including diabetes and cervical cancer screenings. Medicare will also pay for your annual wellness visit to the doctor. If you are looking for sound advice when it comes to Medicare, call or email me I am happy to help. ~ Bryan Valentine.