By Bonnie Bochniak
Vice President, Government Relations
MBPA/MFBA
October 1, 2013 – In an attempt to better streamline reporting requirements, on September 5, 2013, the Internal Revenue Service (IRS) issued two proposed regulations to implement the information reporting requirements for insurers and certain employers under the Affordable Care Act (ACA). One proposed rule would require large employers to report to the IRS information regarding the health care coverage offered to full-time employees. The second proposed rule would require insurers, self-insured employers, government-sponsored programs, and entities that provide minimum essential coverage to report information on this coverage to the IRS and to covered individuals. If you are a stakeholder or interested party, you are able to view the proposed regulations by connecting through the links provided below. After your review, you are able to submit your comments directly to the IRS. MBPA is encouraging those who have a vested interest to please offer your suggestions. Comments are due November 8, 2013.
October 1, 2013 – Even HIPAA Wellness Programs are impacted by the Patient Protection and Affordable Care Act (PPACA). The final regulations issued by the Departments of Health and Human Services, Labor and Treasury update the existing HIPAA wellness program rules and are applicable for plan years beginning on or after January 1, 2014.
Overview of HIPAA Wellness Plan Requirements as Revised by PPACA
Under HIPAA, wellness programs are broken down into two main categories:
• Participatory Programs: none of the conditions to obtain the wellness program reward are based on an individual satisfying a health standard. These types of programs are not required to satisfy the HIPAA wellness rule requirements discussed below. (Examples: reimburse for fitness membership costs, reward to participate in diagnostic testing not based on outcomes, reward for attending an educational seminar, etc.)
• Health-Contingent Programs: requires an individual to satisfy a standard related to a health factor in order to obtain a wellness program reward. These can be either “activity-based” where an individual is required to complete an activity related to a health factor but does not require a specific outcome (examples: walking, diet, exercise programs, etc.) or “outcome-based” where an individual is required to attain or maintain a specific health outcome (examples: reward for not smoking, attaining certain results on a biometric screening, maintaining a healthy BMI, etc.).
In general, the HIPAA nondiscrimination rules prohibit a group health plan from discriminating against an individual based on a health factor. An exception to this general rule is if there is a wellness program in place that satisfies the following five requirements:
1. The reward/incentive cannot be more than 20% of the total cost of coverage (employer and employee costs) for the benefit package in which the employee is receiving coverage. Under PPACA, in 2014 this amount is increased to 30% of the total cost of coverage for non-tobacco wellness program rewards and up to 50% for programs that are designed to prevent or reduce tobacco use.
2. The program must be reasonably designed to promote health and prevent disease. (According to the DOL, this means that the program should have a reasonable chance of improving health or preventing disease in individuals, not be overly burdensome, not be a “subterfuge” for discriminating based on a health factor, and not be highly suspect in the method chosen to promote health or prevent disease. This is a facts and circumstances determination.)
3. Individuals must be given an opportunity to qualify for the reward at least once per year.
4. For activity-based wellness programs, the program must provide a reasonable alternative method for individuals for whom it is unreasonably difficult or medically inadvisable to meet the initial standard. For outcome-based programs, the program must provide a reasonable alternative for anyone who failed to meet the initial health standard, regardless of medical reason.
Individuals who are given an alternative must be able to earn the same, full reward as those who meet the initial standard, even if it takes those under the alternative more time.
Programs have flexibility to determine whether to provide the same alternative to an entire class of individuals or to provide on an individual basis.
Programs do not need to determine the alternative in advance of a request for an alternative standard.
Employer may seek physician verification of the need for a reasonable alternative only under an activity-based wellness program.
5. Plan materials describing the terms of the program must describe the availability of a reasonable alternative standard to qualify for the reward. The plan materials addressing an activity-based wellness program must also include contact information and a statement that an individual’s personal physician’s request/opinion will be accommodated.
If these five criteria are satisfied, the wellness program will be considered nondiscriminatory under HIPAA.
Interaction of Wellness Plan Incentive Rules and PPACA Affordability Standards Under PPACA, in order for an employer to avoid potential penalties under the employer shared responsibility provisions in 2015 and beyond, employers must offer “affordable” and “minimum value” coverage to at least 95% of its full-time employees. For these purposes, “affordable” means that the employee’s share of the self-only premium for the employer’s lowest cost plan that provides minimum value does not exceed 9.5% of the employee’s household income. Alternatively, in lieu of using an employee’s household income to determine affordability, an employer may elect to use one of three IRS safe harbors (the employee’s W-2 wages, the employee’s rate of pay, or the federal poverty level for a single individual).
The IRS has recently issued a Notice of Proposed Rulemaking addressing various issues, including the interplay between wellness plan incentives/rewards and PPACA affordability standards. The IRS indicated that wellness incentives tied to the reduction or prevention of tobacco use may be counted when determining affordability. However, other wellness incentives, such as incentives for completing health risk assessments, meeting health targets, undergoing annual wellness exams, etc. may not be counted when determining affordability. The preamble to the Notice of Proposed Rulemaking states:
“The proposed regulations provide that the affordability of an employer-sponsored plan is determined by assuming that each employee fails to satisfy the requirement of a wellness program, except the requirements of a nondiscriminatory wellness program related to tobacco use.”
Therefore, there is a stronger incentive for employers to implement tobacco-based incentives as those can actually increase the likelihood of satisfying PPACA affordability standards.
What Should Employers Be Doing? While the basic structure of HIPAA wellness programs remain the same, PPACA has imposed some significant changes. Employers who currently offer a wellness program should review the terms of the program to ensure that it will satisfy the new PPACA requirements beginning in 2014. Whether employers currently offer a wellness program or are considering offering a wellness program as part of its benefits package, employers should work closely with their benefits consultants and legal counsel to ensure that the program is structured in a way to satisfy the applicable rules. Noncompliant plans could be subject to penalties under PPACA of up to $100 per day, and could also be subject to enforcement actions by the Department of Labor.
* This article is not intended to give legal advice. It is comprised of general information. Employers facing specific issues should seek the assistance of legal counsel.
Kristi R. Gauthier is a senior attorney in Clark Hill’s Birmingham office and concentrates her practice in Employee Benefits Law. Kristi has represented clients in a wide variety of employee benefits issues involving health and welfare benefits, as well as retirement plans. Kristi is admitted to practice in the State of Michigan, the U.S. District Court for the Eastern District of Michigan, and the U.S. Sixth Circuit Court of Appeals. She also is active in the legal community with memberships in the American Bar Association, the State Bar of Michigan, and the Oakland County Bar Association where she is a member of the Employee Benefits Committee. Kristi also serves as a member of the Clark Hill Diversity and Inclusion Committee. Kristi has lectured on various employee benefits issues, including ERISA compliance, healthcare reform, COBRA, section 125 plans, 403(b) plans and IRS plan correction programs. Kristi is also a co-author of the ABA publication ERISA Survey of Federal Circuits. Kristi was named a “Rising Star” by Michigan Super Lawyers in 2011.
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On Friday, September 13, 2013 the Departments of Labor, Treasury and Health and Human Services provided guidance on the application of certain provisions of the Affordable Care Act (Act) on health reimbursement arrangements (HRAs), certain health flexible spending arrangements (Health FSAs) and employee assistance programs (EAPs). The following reviews this guidance:
1. Since HRAs are group health plans under ERISA, they must meet the market reforms under the Act.
2. HRAs integrated with a group health plan will be treated as complying with both the annual dollar limit prohibition and the preventive services requirement if certain conditions are met, as explained below.
3. An HRA can be integrated with the group health plan of the employer or of another employer.
4. An HRA used to purchase individual market coverage is treated as not integrated for the annual dollar limit prohibition or the preventive services requirements.
5. For an HRA to be except from these requirements it must qualify as either a retiree medical plan or an “excepted benefit” under HIPAA.
6. Amounts made available under an HRA that is integrated with an eligible employer sponsored plan can be used for determining affordability or minimum value, but not both.
7. If an HRA is integrated with a plan offered by another employer for purposes of the market reforms, such an HRA cannot count toward the affordability or minimum value requirement of the plan offered by the other employer.
8. An HRA will be treated as integrated with another group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements if the requirements of at least one of two integration methods, Minimum Value Not Required and Minimum Value Required, are met
Minimum Value Not Required. This method is met if:
a) the employer offers a group health plan (other than the HRA) to the employee that does not consist solely of excepted benefits;
b) the employee receiving the HRA is actually enrolled in a group health plan (other than the HRA) that does not consist solely of excepted benefits, regardless of whether the employer sponsors the plan (non-HRA group coverage);
c) the HRA is available only to employees who are enrolled in non-HRA group coverage, regardless of whether the employer sponsors the non-HRA group coverage (for example, the HRA may be offered only to employees who do not enroll in the employer’s group health plan but are enrolled in other non-HRA group coverage, such as a plan maintained by the employer of the employee’s spouse);
d) the HRA is limited to reimbursement of one or more of the following-co-payments, co-insurance, deductibles, and premiums under the non-HRA group coverage, as well as medical care (as defined under Code Section 213(d)) that does not constitute essential health benefits; and
e) under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.
This opt-out feature is required because the benefits provided by the HRA generally will constitute minimum essential coverage and will therefore preclude the individual from claiming a premium tax credit.
Minimum Value Required. This method is met if:
a) the employer offers a group health plan to the employee that provides minimum value;
b) the employee receiving the HRA is actually enrolled in a group health plan that provides minimum value, regardless of whether the employer sponsors the plan (non-HRA MV group coverage);
c) the HRA is available only to employees who are actually enrolled in non-HRA MV group coverage, regardless of whether the employer sponsors the non-HRA MV group coverage (for example, the HRA may be offered only to employees who do not enroll in the employer’s group health plan but are enrolled in other non-HRA MV group coverage, such as a plan maintained by an employer of the employee’s spouse); and
d) under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually, and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.
9. An employee who ceases participation in a group health plan may use any remaining amounts credited in the HRA while integrated after being covered without causing the HRA to fail to comply with the market reforms.
10. If the requirements of Minimum Value Required Integration Method are met, an HRA integrated with that group health plan will not be treated as imposing an annual limit in violation of the annual dollar limit prohibition, even if that group health plan does not cover a category of essential health benefit and the HRA is available to cover that category of essential health benefits and limits the coverage to the HRA maximum benefit.
11. If a Health FSA offered by an employer does not qualify as excepted benefits, the Health FSA generally is subject to the market reforms. If they are not integrated with a group health plan, they will fail the preventive care requirements. There will be an exception for Health FSAs from the annual dollar limit prohibition that is offered under a cafeteria plan.
12. The above exception will not apply to HRAs that could be treated as Health FSAs.
13. An Employee assistance program will be considered to be an excepted benefit, but only if the program does not provide significant benefits in the nature of medical care or treatment. Since this term is not defined in the guidance, employers may use a reasonable, good faith interpretation of whether an EAP provides such care or treatment, until further guidance is released.
14. Premiums for coverage purchased on the marketplace cannot be reimbursed under a premium only plan under Code Section 125 for tax years beginning after December 31, 2013. For any premium only plans that have a noncalendar plan years as of September 13, 2013, this restriction will not apply before the first plan year beginning after December 31, 2013. Because of this, any individual may not claim a premium tax credit for any month in which he or she was covered by a qualified health plan purchased though a state marketplace and reimbursed under a premium only plan under Code Section 125.
This provision was added because several state marketplaces established before 2013 allowed individuals to be reimbursed for individual health insurance premiums purchased through a state marketplaces from premium only plan under Code Section 125.
These provisions apply for plan years beginning on or after January 1, 2014, but may be applied for all prior periods.
Larry Grudzien is an attorney practicing exclusively in the field of employee benefits. He has experience in dealing with qualified plans, health and welfare, fringe benefits and executive compensation areas. He has more than 35 years of experience in employee benefit law and is an adjunct faculty member of John Marshall Law School’s LL.M. program in employee benefits and at the Valparaiso University School of Law, where he teaches a number of courses.
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-09-30 17:00:002015-10-08 00:00:00Explanation of Guidance on HRAs, Health FSAs and Certain Other Employer Healthcare Arrangement Options
Oct. 1, 2013 – The Office for Civil Rights and Office of the National Coordinator for Health Information Technology have collaborated to develop model Notices of Privacy Practices for health care providers and health plans to use to communicate with their patients and plan members.
The HIPAA Privacy Rule gives individuals a fundamental right to be informed of the privacy practices of health plans and health care providers, as well as to be informed of their privacy rights with respect to their personal health information. Health plans and covered health care providers are required to develop and distribute a notice that provides a clear, user friendly explanation of these rights and practices.
Many entities have asked for additional guidance on how to create a clear, accessible notice that their patients or plan members can understand. In response, OCR and ONC have provided separate models for health plans and health care providers. The three options are:
• Notice in the form of a booklet;
• A layered notice that presents a summary of the information on the first page, followed by the full content on the following pages;
• A notice with the design elements found in the booklet, but formatted for full page presentation.
• A text only version of the notice.
The models reflect the regulatory changes of the Omnibus Rule and can serve as the baseline for covered entities working to come into compliance with the new requirements. In particular, the models highlight the new patient right to access their electronic information held in an electronic health record, if their provider has an EHR in their practice. Covered entities may use these models by entering their specific information into the model and then printing for distribution and posting on their websites.
• Booklet
• Layered Notice
• Full Page
• Text Only
• Questions and Instructions
For more information about the HIPAA Privacy Rule and the Notice requirements, see: http://www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/notice.html
• A covered entity must make its notice available to any person who asks for it.
• A covered entity must prominently post and make available its notice on any web site it maintains that provides information about its customer services or benefits.
NPP Provider Files –
• NPP Booklet – HC Provider
• NPP Layered – HC Provider
• NPP Full Page – HC Provider
• NPP HC Provider – Text Version
NPP Health Plan Files –
• NPP Booklet – Health Plan
• NPP Full Page – Health Plan
• NPP Layered – Health Plan
• NPP Health Plan – Text Version
Instructions –
• Health Plan Instructions
• HC Provider Instructions
• Questions and Instructions for using the Model Notices
• For copies of the above, please click on the link below: http://www.hhs.gov/ocr/privacy/hipaa/modelnotices.html
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October 1, 2013 – To help finance health care reform initiatives created under the Affordable Care Act, the federal government established new taxes and fees that impact health insurers and customers. The Blues are committed to helping customers understand what the taxes and fees are for and what they will cost.
Regardless of the customer’s renewal or plan date, the Blues will begin billing fully insured customers for five ACA taxes and fees starting with Jan. 1, 2014, invoices.
Not all federal and state taxes apply to all segments. Customers will be billed for the applicable taxes and fees.
Your 2014 quotes, renewals and bills will include the amount of federal and state taxes you will need to pay. If you want a detailed breakdown of your taxes and fees, use our taxes and fees estimator tool at bcbsm.com. It now includes the State Insurance Premium Tax and the ACA federal taxes and fees.
To access the tool:
1. Go to bcbsm.com.
2. Go to Help and click on Calculators and Tools.
Under Health care reform, click on Health Insurance Tax Estimator.
Excerpted from BluesMarketplace Customer Edition, August 21, 2013
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Oct. 1, 2013 – More than 200 people gathered Sept. 24 at the MBPA Health Care Reform Conference in Troy to learn more about the operational impact of the ACA on their business and employees, hear from experts and ask questions about various aspects of the law.
The conference opened with a session focusing on the operational effects of the ACA on businesses, featuring remarks by Kristi Gauthier, senior attorney at Clark Hill, and Don McAnelly, CPA and Principal in Charge at Rehmann’s Saginaw office.
A highlight of the conference was the session featuring Todd Stankewicz, a representative from the U.S. Dept. of Health and Human Services; Gerald L. Moore, District Director, U.S. Small Business Administration’s Michigan Office; and Nichelle D. Gray, Tax Specialist and Stakeholder Liaison from the Internal Revenue Service.
Stankewicz provided an overview of the health care Marketplace, which goes into effect Oct. 1, 2013. Noting that the Marketplace is set up to allow for direct comparison between plans, Stankewicz said it should make shopping for health care coverage easier for people. Open enrollment through the Marketplace begins Oct. 1, 2013 and continues through March 31, 2014.
In Michigan, Stankewicz said, there are four navigator organizations to help consumers understand new health insurance options available through the Marketplace and can help them select a health plan. In Michigan, the ACA navigators are: Michigan Consumers for Healthcare, Community Bridges Management, the Arab Community Center for Economic & Social Services, and American Indian Health and Family Services of Southeastern Michigan.
Navigators will help consumers prepare electronic and paper applications to establish eligibility and enroll in coverage through the Marketplace, which will be available at HealthCare.gov and CuidadoDeSalud.gov starting on October 1.
Todd Stankewicz, representative from the U.S. Dept. of Health and Human Services, speaks about the ACA at the Health Care Reform Conference.
Additional assistance is available through Certified Application Counselors (CAC), said Stankewicz. A Certified Application Counselor may be a community health center or other health care provider, hospital, a non-federal governmental or nonprofit social service agency in a state with a Federally-facilitated Marketplace or a State Partnership Marketplace, which assists people applying for coverage through the Marketplace. Both Navigators and CACs go through training before assuming these roles.
He also noted that there is a toll-free call center to answer Marketplace questions 24 hours a day, seven days a week. The number is 1-800-318-2596. People can also connect via Facebook: http://www.Facebook.com/HealthCare.gov or Twitter: @HealthCareGov.
Professionals who want to learn about the Marketplace and helping people apply can visit http://marketplace.cms.gov/.
SBA District Director Moore noted that his agency is hearing from many business owners who do not understand the ACA. To help provide information to small businesses, the SBA has been hosting educational sessions. He encouraged small business owners in the audience to learn whether they are eligible for the ACA tax credits and if they are, to use them. He also said that 4 percent or less of small businesses are affected by the shared responsibility portion of the bill.
Nichelle Gray from the IRS, who participated in the session by phone, also touched on the tax credits and other tax aspects of the ACA.
All three presenters fielded a number of questions from the audience, ranging from employee coverage for businesses with fewer than 50 FTEs, to coverage for the self-employed and how the expansion of Medicaid in Michigan may impact their employees.
The conference wrapped up with a Town Hall style meeting where attendees could ask questions from experts representing Blue Cross Blue Shield of Michigan, Clark Hill, Rehmann, State of Michigan and BASIC. Carol Cain of the Detroit Free Press and CBS 62 moderated the Town Hall.
Sponsors of the conference were: Blue Cross Blue Shield of Michigan, Clark Hill, BASIC, Michigan Small Business Training and Development Center, and 101 Best and Brightest Companies to Work For.
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-09-30 17:00:002015-10-08 00:00:00MBPA Health Care Reform Conference Features Experts from HHS, IRS and SBA
This Technical Release provides guidance on the application of certain provisions of the Affordable Care Act(1) to the following types of arrangements: (1) health reimbursement arrangements (HRAs), including HRAs integrated with a group health plan; (2) group health plans under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy, such as a reimbursement arrangement described in Revenue Ruling 61-146, 1961-2 CB 25, or arrangements under which the employer uses its funds to directly pay the premium for an individual health insurance policy covering the employee (collectively, an employer payment plan); and (3) certain health flexible spending arrangements (health FSAs). This Technical Release also provides guidance on section 125(f)(3) of the Internal Revenue Code (Code) and on employee assistance programs or EAPs.
The Departments of the Treasury (Treasury Department), Health and Human Services (HHS), and Labor (DOL) (collectively, the Departments) are continuing to work together to develop coordinated regulations and other administrative guidance to assist stakeholders with implementation of the Affordable Care Act. The guidance in this Technical Release is being issued in substantially identical form by the Treasury Department, and guidance is being issued by HHS to reflect that HHS concurs in the application of the laws under its jurisdiction as set forth in this Technical Release.
II. Background
A. Health Reimbursement Arrangements
An HRA is an arrangement that is funded solely by an employer and that reimburses an employee for medical care expenses (as defined under Code § 213(d)) incurred by the employee, or his spouse, dependents, and any children who, as of the end of the taxable year, have not attained age 27, up to a maximum dollar amount for a coverage period. IRS Notice 2002-45, 2002-02 CB 93; Revenue Ruling 2002-41, 2002-2 CB 75. This reimbursement is excludable from the employee’s income. Amounts that remain at the end of the year generally can be used to reimburse expenses incurred in later years. HRAs generally are considered to be group health plans within the meaning of Code § 9832(a), § 733(a) of the Employee Retirement Income Security Act of 1974 (ERISA), and § 2791(a) of the Public Health Service Act (PHS Act) and are subject to the rules applicable to group health plans.
B. Employer Payment Plans
Revenue Ruling 61-146 holds that if an employer reimburses an employee’s substantiated premiums for non-employer sponsored hospital and medical insurance, the payments are excluded from the employee’s gross income under Code §106. This exclusion also applies if the employer pays the premiums directly to the insurance company. An employer payment plan, as the term is used in this Technical Release, does not include an employer-sponsored arrangement under which an employee may choose either cash or an after-tax amount to be applied toward health coverage. Individual employers may establish payroll practices of forwarding post-tax employee wages to a health insurance issuer at the direction of an employee without establishing a group health plan, if the standards of the DOL’s regulation at 29 C.F.R. §2510.3-1(j) are met.
C. Health Flexible Spending Arrangements (Health FSAs)
In general, a health FSA is a benefit designed to reimburse employees for medical care expenses (as defined in Code § 213(d), other than premiums) incurred by the employee, or the employee’s spouse, dependents, and any children who, as of the end of the taxable year, have not attained age 27. See Employee Benefits-Cafeteria Plans, 72 Fed. Reg. 43938, 43957 (August 6, 2007) (proposed regulations; to be codified, in part, once final, at 26 C.F.R. §1.125-5); Code §§ 105(b) and 106(f). Contributions to a health FSA offered through a cafeteria plan satisfying the requirements of Code § 125 (a Code § 125 plan) do not result in gross income to the employee. Code § 125(a). While employees electing coverage under a health FSA typically also elect to enter into a salary reduction agreement, employers may provide additional health FSA benefits in excess of the salary reduction amount. See Employee Benefits-Cafeteria Plans, 72 Fed. Reg. 43938, 43955-43957 (August 6, 2007) (proposed regulations; to be codified, in part, once final, at 26 C.F.R. §§1.125-1(r), 1.125-5(b)). For plan years beginning after December 31, 2012, the amount of the salary reduction is limited by Code §125(i) to $2,500 (indexed annually for plan years beginning after December 31, 2013). See IRS Notice 2012-40, 2012-26 IRB 1046, for more information about the application of the limitation. Additional employer contributions are not limited by Code §125(i).
The Code, ERISA, and the PHS Act impose various requirements on group health plans, but certain of these requirements do not apply to a group health plan in relation to its provision of excepted benefits. Code § 9831(b), ERISA § 732(b), PHS Act §§ 2722(b) and 2763. Although a health FSA is a group health plan within the meaning of Code §9832(a), ERISA § 733(a), and PHS Act § 2791(a), a health FSA may be considered to provide only excepted benefits if other group health plan coverage not limited to excepted benefits is made available for the year to employees by the employer, but only if the arrangement is structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the arrangement for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election). 26 C.F.R. §54.9831-1(c)(3)(v), 29 C.F.R. §2590.732(c)(3)(v), and 45 C.F.R. §146.145(c)(3)(v).
D. Affordable Care Act Guidance
1. Market Reforms – In General
The Affordable Care Act contains certain market reforms that apply to group health plans (the market reforms).(2) In accordance with Code § 9831(a)(2) and ERISA §732(a),the market reforms do not apply to a group health plan that has fewer than two participants who are current employees on the first day of the plan year, and, in accordance with Code §9831(b), ERISA § 732(b), and PHS Act §§2722(b) and 2763, the market reforms also do not apply to a group health plan in relation to its provision of excepted benefits described in Code §9832(c), ERISA §733(c) and PHS Act §2791(c).(3) Excepted benefits include, among other things, accident-only coverage, disability income, certain limited-scope dental and vision benefits, certain long-term care benefits, and certain health FSAs.
The market reforms specifically addressed in this Technical Release are:(4)
(a) PHS Act § 2711 which provides that a group health plan (or a health insurance issuer offering group health insurance coverage) may not establish any annual limit on the dollar amount of benefits for any individual-this rule does not prevent a group health plan, or a health insurance issuer offering group health insurance coverage, from placing an annual limit, with respect to any individual, on specific covered benefits that are not essential health benefits(5) to the extent that such limits are otherwise permitted under applicable law (the annual dollar limit prohibition); and
(b) PHS Act § 2713 which requires non-grandfathered group health plans (or health insurance issuers offering group health insurance plans) to provide certain preventive services without imposing any cost-sharing requirements for these services (the preventive services requirements).
2. Prior Guidance on the Application of the Market Reforms to HRAs
The preamble to the interim final regulations implementing the annual dollar limit prohibition states that if an HRA is integrated with other coverage as part of a group health plan and the other coverage alone would comply with the annual dollar limit prohibition, the fact that benefits under the HRA by itself are limited does not fail to comply with the annual dollar limit prohibition because the combined benefit satisfies the requirements. Further, the preamble states that in the case of a standalone HRA that is limited to retirees, the exemption from the requirements of the Code and ERISA relating to the Affordable Care Act for plans with fewer than two current employees means that the retiree-only HRA is not subject to the annual dollar limit prohibition. 75 Fed. Reg. 37188, 37190-37191 (June 28, 2010).
On January 24, 2013, the Departments issued FAQs that address the application of the annual dollar limit prohibition to certain HRA arrangements (HRA FAQs).(6) In the HRA FAQs, the Departments state that an HRA is not integrated with primary health coverage offered by an employer unless, under the terms of the HRA, the HRA is available only to employees who are covered by primary group health plan coverage that is provided by the employer and that meets the annual dollar limit prohibition. Further, the HRA FAQs indicate that the Departments intend to issue guidance providing that:
(a) for purposes of the annual dollar limit prohibition, an employer-sponsored HRA cannot be integrated with individual market coverage or with individual policies provided under an employer payment plan, and, therefore, an HRA used to purchase coverage on the individual market under these arrangements will fail to comply with the annual dollar limit prohibition; and
(b) an employer-sponsored HRA may be treated as integrated with other coverage only if the employee receiving the HRA is actually enrolled in the coverage, and any HRA that credits additional amounts to an individual, when the individual is not enrolled in primary coverage meeting the annual dollar limit prohibition provided by the employer, will fail to comply with the annual dollar limit prohibition.
The HRA FAQs also state that the Departments anticipate that future guidance will provide that, whether or not an HRA is integrated with other group health plan coverage, unused amounts credited before January 1, 2014 consisting of amounts credited before January 1, 2013, and amounts that are credited in 2013 under the terms of an HRA as in effect on January 1, 2013, may be used after December 31, 2013 to reimburse medical expenses in accordance with those terms without causing the HRA to fail to comply with the annual dollar limit prohibition. If the HRA terms in effect on January 1, 2013 did not prescribe a set amount or amounts to be credited during 2013 or the timing for crediting such amounts, then the amounts credited may not exceed those credited for 2012 and may not be credited at a faster rate than the rate that applied during 2012.
3. Prior Guidance on the Application of the Market Reforms to Health FSAs
Under the interim final rules implementing the annual dollar limit prohibition, a health FSA, as defined in Code § 106(c)(2), is not subject to the annual dollar limit prohibition. See 26 C.F.R. §54.9815-2711T(a)(2)(ii), 29 C.F.R. §2590.715-2711(a)(2)(ii), and 45 C.F.R. §147.126(a)(2)(ii). See Q&A 8 of this Technical Release limiting the exemption from the annual dollar limit prohibition to a health FSA that is offered through a Code § 125 plan.
4. Prior Guidance on the Application of Code §§ 36B and 5000A
Section 36B of the Code allows a premium tax credit to certain taxpayers who enroll (or whose family members enroll) in a qualified health plan (QHP) through an Affordable Insurance Exchange (referred to in this Technical Release as an Exchange, and also referred to in other published guidance as a Marketplace). The credit subsidizes a portion of the premiums for the QHP. In general, the premium tax credit may not subsidize coverage for an individual who is eligible for other minimum essential coverage. If the minimum essential coverage is eligible employer-sponsored coverage, however, an individual is treated as eligible for that coverage only if the coverage is affordable and provides minimum value or if the individual enrolls in the coverage.
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).
Amounts newly made available for the current plan year under an HRA that is integrated with an eligible employer-sponsored plan and that an employee may use to pay premiums are counted for purposes of determining affordability of an eligible employer-sponsored plan under Code § 36B. See Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78 Fed. Reg. 25909, 25914 (May 3, 2013) (proposed regulations; to be codified, in part, once final, at 26 C.F.R. §1.36B-2(c)(3)(v)(A)(5)). Amounts newly made available for the current plan year under an HRA that is integrated with an eligible employer-sponsored plan are counted toward the plan’s minimum value percentage for that plan year if the amounts may be used only to reduce cost-sharing for covered medical expenses and the amount counted for this purpose is the amount of expected spending for health care costs in a benefit year. See Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78 Fed. Reg. 25909, 25916 (May 3, 2013) (proposed regulations; to be codified, in part, once final, at 26 C.F.R. §1.36B-6(c)(4), (c)(5)). See Q&A 11 of this Technical Release for more explanation of the application of these rules to HRAs and other arrangements.
III. Guidance
A. Guidance on HRAs and Certain other Employer Healthcare Arrangements, Health FSAs, and Employee Assistance Programs or EAPs Under the Joint Jurisdiction of the Departments
1. Application of the Market Reform Provisions to HRAs and Certain other Employer Healthcare Arrangements
Question 1: The HRA FAQs provide that an employer-sponsored HRA cannot be integrated with individual market coverage, and, therefore, an HRA used to purchase coverage on the individual market will fail to comply with the annual dollar limit prohibition. May other types of group health plans used to purchase coverage on the individual market be integrated with that individual market coverage for purposes of the annual dollar limit prohibition?
Answer 1: No. A group health plan, including an HRA, used to purchase coverage on the individual market is not integrated with that individual market coverage for purposes of the annual dollar limit prohibition.
For example, a group health plan, such as an employer payment plan, that reimburses employees for an employee’s substantiated individual insurance policy premiums must satisfy the market reforms for group health plans. However the employer payment plan will fail to comply with the annual dollar limit prohibition because (1) an employer payment plan is considered to impose an annual limit up to the cost of the individual market coverage purchased through the arrangement, and (2) an employer payment plan cannot be integrated with any individual health insurance policy purchased under the arrangement.
Question 2: How do the preventive services requirements apply to an HRA that is integrated with a group health plan?
Answer 2: Similar to the analysis of the annual dollar limit prohibition, an HRA that is integrated with a group health plan will comply with the preventive services requirements if the group health plan with which the HRA is integrated complies with the preventive services requirements.
Question 3: The HRA FAQs provide that an employer-sponsored HRA cannot be integrated with individual market coverage, and, therefore, an HRA used to purchase coverage on the individual market will fail to comply with the annual dollar limit prohibition. May a group health plan, including an HRA, used to purchase coverage on the individual market be integrated with that individual market coverage for purposes of the preventive services requirements?
Answer 3: No. A group health plan, including an HRA, used to purchase coverage on the individual market is not integrated with that individual market coverage for purposes of the preventive services requirements.
For example, a group health plan, such as an employer payment plan, that reimburses employees for an employee’s substantiated individual insurance policy premiums must satisfy the market reforms for group health plans. However, the employer payment plan will fail to comply with the preventive services requirements because (1) an employer payment plan does not provide preventive services without cost-sharing in all instances, and (2) an employer payment plan cannot be integrated with any individual health insurance policy purchased under the arrangement.
Question 4: Under what circumstances will an HRA be integrated with another group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements?
Answer 4: 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 meets the requirements under either of the integration methods described below. Pursuant to this Technical Release, under both methods, integration does not require that the HRA and the coverage with which it is integrated share the same plan sponsor, the same plan document or governing instruments, or file a single Form 5500, if applicable.
Integration Method: Minimum Value Not Required
An HRA is integrated with another group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements if (1) the employer offers a group health plan (other than the HRA) to the employee that does not consist solely of excepted benefits; (2) the employee receiving the HRA is actually enrolled in a group health plan (other than the HRA) that does not consist solely of excepted benefits, regardless of whether the employer sponsors the plan (non-HRA group coverage); (3) the HRA is available only to employees who are enrolled in non-HRA group coverage, regardless of whether the employer sponsors the non-HRA group coverage (for example, the HRA may be offered only to employees who do not enroll in the employer’s group health plan but are enrolled in other non-HRA group coverage, such as a plan maintained by the employer of the employee’s spouse); (4) the HRA is limited to reimbursement of one or more of the following-co-payments, co-insurance, deductibles, and premiums under the non-HRA group coverage, as well as medical care (as defined under Code § 213(d)) that does not constitute essential health benefits; and (5) under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA. This opt-out feature is required because the benefits provided by the HRA generally will constitute minimum essential coverage under Code § 5000A (see Q&A 10 of this Technical Release) and will therefore preclude the individual from claiming a Code § 36B premium tax credit.
Integration Method: Minimum Value Required
Alternatively, an HRA that is not limited with respect to reimbursements as required under the integration method expressed above is integrated with a group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements if (1) the employer offers a group health plan to the employee that provides minimum value pursuant to Code § 36B(c)(2)(C)(ii); (2) the employee receiving the HRA is actually enrolled in a group health plan that provides minimum value pursuant to Code § 36B(c)(2)(C)(ii), regardless of whether the employer sponsors the plan (non-HRA MV group coverage); (3) the HRA is available only to employees who are actually enrolled in non-HRA MV group coverage, regardless of whether the employer sponsors the non-HRA MV group coverage (for example, the HRA may be offered only to employees who do not enroll in the employer’s group health plan but are enrolled in other non-HRA MV group coverage, such as a plan maintained by an employer of the employee’s spouse); and (4) under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually, and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.
Example (Integration Method: Minimum Value Not Required)
Facts. Employer A sponsors a group health plan and an HRA for its employees. Employer A’s HRA is available only to employees who are either enrolled in its group health plan or in non-HRA group coverage through a family member. Employer A’s HRA is limited to reimbursement of co-payments, co-insurance, deductibles, and premiums under Employer A’s group health plan or other non-HRA group coverage (as applicable), as well as medical care (as defined under Code § 213(d)) that does not constitute essential health benefits. Under the terms of Employer A’s HRA, an employee is permitted to permanently opt out of and waive future reimbursements from the HRA both upon termination of employment and at least annually.
Employer A employs Employee X. Employee X chooses to enroll in non-HRA group coverage sponsored by Employer B, the employer of Employee X’s spouse, instead of enrolling in Employer A’s group health plan. Employer A and Employer B are not treated as a single employer under Code § 414(b), (c), (m), or (o). Employee X attests to Employer A that he is covered by Employer B’s non-HRA group coverage. When seeking reimbursement under Employer A’s HRA, Employee X attests that the expense for which he seeks reimbursement is a co-payment, co-insurance, deductible, or premium under Employer B’s non-HRA group coverage or medical care (as defined under Code § 213(d)) that is not an essential health benefit.
Conclusion. Employer A’s HRA is integrated with Employer B’s non-HRA group coverage for purposes of the annual dollar limit prohibition and the preventive services requirements.
Example (Integration Method: Minimum Value Required)
Facts. Employer A sponsors a group health plan that provides minimum value and an HRA for its employees. Employer A’s HRA is available only to employees who are either enrolled in its group health plan or in non-HRA MV group coverage through a family member. Under the terms of Employer A’s HRA, an employee is permitted to permanently opt out of and waive future reimbursements from the HRA both upon termination of employment and at least annually.
Employer A employs Employee X. Employee X chooses to enroll in non-HRA MV group coverage sponsored by Employer B, the employer of Employee X’s spouse, instead of enrolling in Employer A’s group health plan. Employer A and Employer B are not treated as a single employer under Code § 414(b), (c), (m), or (o). Employee X attests to Employer A that he is covered by Employer B’s non-HRA MV group coverage and that the coverage provides minimum value.
Conclusion. Employer A’s HRA is integrated with Employer B’s non-HRA MV group coverage for purposes of the annual dollar limit prohibition and the preventive services requirements.
Question 5: May an employee who is covered by both an HRA and a group health plan with which the HRA is integrated, and who then ceases to be covered under the group health plan that is integrated with the HRA, be permitted to use the amounts remaining in the HRA?
Answer 5: Whether or not an HRA is integrated with other group health plan coverage, unused amounts that were credited to an HRA while the HRA was integrated with other group health plan coverage may be used to reimburse medical expenses in accordance with the terms of the HRA after an employee ceases to be covered by other integrated group health plan coverage without causing the HRA to fail to comply with the market reforms. Note that coverage provided through an HRA, other than coverage consisting solely of excepted benefits, is an eligible employer-sponsored plan and, therefore, minimum essential coverage under Code § 5000A.
Question 6: Does an HRA impose an annual limit in violation of the annual dollar limit prohibition if the group health plan with which an HRA is integrated does not cover a category of essential health benefits and the HRA is available to cover that category of essential health benefits (but limits the coverage to the HRA’s maximum benefit)?
Answer 6: In general, an HRA integrated with a group health plan imposes an annual limit in violation of the annual dollar limit prohibition if the group health plan with which the HRA is integrated does not cover a category of essential health benefits and the HRA is available to cover that category of essential health benefits and limits the coverage to the HRA’s maximum benefit. This situation should not arise for a group health plan funded through non-grandfathered health insurance coverage in the small group market, as small group market plans must cover all categories of essential health benefits, with the exception of pediatric dental benefits, if pediatric dental benefits are available through a stand-alone dental plan offered in accordance with 45 C.F.R. §155.1065.(7)
However, under the integration method available for plans that provide minimum value described under Q&A 4 of this Technical Release, if a group health plan provides minimum value under Code § 36B(c)(2)(C)(ii), an HRA integrated with that group health plan will not be treated as imposing an annual limit in violation of the annual dollar limit prohibition, even if that group health plan does not cover a category of essential health benefits and the HRA is available to cover that category of essential health benefits and limits the coverage to the HRA’s maximum benefit.
2. Application of the Market Reforms to Certain Health FSAs
Question 7: How do the market reforms apply to a health FSA that does not qualify as excepted benefits?
Answer 7: The market reforms do not apply to a group health plan in relation to its provision of benefits that are excepted benefits. Health FSAs are group health plans but will be considered to provide only excepted benefits if the employer also makes available group health plan coverage that is not limited to excepted benefits and the health FSA is structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the health FSA for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election).(8) See 26 C.F.R. §54.9831-1(c)(3)(v), 29 C.F.R. §2590.732(c)(3)(v), and 45 C.F.R. § 146.145(c)(3)(v). Therefore, a health FSA that is considered to provide only excepted benefits is not subject to the market reforms.
If an employer provides a health FSA that does not qualify as excepted benefits, the health FSA generally is subject to the market reforms, including the preventive services requirements. Because a health FSA that is not excepted benefits is not integrated with a group health plan, it will fail to meet the preventive services requirements.(9)
The Departments understand that questions have arisen as to whether HRAs that are not integrated with a group health plan may be treated as a health FSA as defined in Code §106(c)(2). Notice 2002-45, 2002-02 CB 93, states that, assuming that the maximum amount of reimbursement which is reasonably available to a participant under an HRA is not substantially in excess of the value of coverage under the HRA, an HRA is a health FSA as defined in Code § 106(c)(2). This statement was intended to clarify the rules limiting the payment of long-term care expenses by health FSAs. The Departments are also considering whether an HRA may be treated as a health FSA for purposes of the exclusion from the annual dollar limit prohibition. In any event, the treatment of an HRA as a health FSA that is not excepted benefits would not exempt the HRA from compliance with the other market reforms, including the preventive services requirements, which the HRA would fail to meet because the HRA would not be integrated with a group health plan. This analysis applies even if an HRA reimburses only premiums.
Question 8: The interim final regulations regarding the annual dollar limit prohibition contain an exemption for health FSAs (as defined in Code § 106(c)(2)). See 26 C.F.R. §54.9815-2711T(a)(2)(ii), 29 C.F.R. §2590.715-2711(a)(2)(ii), and 45 C.F.R. §147.126(a)(2)(ii). Does this exemption apply to a health FSA that is not offered through a Code § 125 plan?
Answer 8: No. The Departments intended for this exemption from the annual dollar limit prohibition to apply only to a health FSA that is offered through a Code §125 plan and thus subject to a separate annual limitation under Code § 125(i). There is no similar limitation on a health FSA that is not part of a Code § 125 plan, and thus no basis to imply that it is not subject to the annual dollar limit prohibition.
To clarify this issue, the Departments intend to amend the annual dollar limit prohibition regulations to conform to this Q&A 8 retroactively applicable as of September 13, 2013. As a result, a health FSA that is not offered through a Code § 125 plan is subject to the annual dollar limit prohibition and will fail to comply with the annual dollar limit prohibition.
3. Guidance on Employee Assistance Programs
Question 9: Are benefits under an employee assistance program or EAP considered to be excepted benefits?
Answer 9:The Departments intend to amend 26 C.F.R. §54.9831-1(c), 29 C.F.R. §2590.732(c), and 45 C.F.R. §146.145(c) to provide that benefits under an employee assistance program or EAP are considered to be excepted benefits, but only if the program does not provide significant benefits in the nature of medical care or treatment. Excepted benefits are not subject to the market reforms and are not minimum essential coverage under Code § 5000A. Until rulemaking is finalized, through at least 2014, the Departments will consider an employee assistance program or EAP to constitute excepted benefits only if the employee assistance program or EAP does not provide significant benefits in the nature of medical care or treatment. For this purpose, employers may use a reasonable, good faith interpretation of whether an employee assistance program or EAP provides significant benefits in the nature of medical care or treatment.
B. Guidance Under the Sole Jurisdiction of the Treasury Department and the IRS on HRAs and Code § 125 Plans
Question 10: Is an HRA that has fewer than two participants who are current employees on the first day of the plan year (for example, a retiree-only HRA) minimum essential coverage for purposes of Code §§ 5000A and 36B?
Answer 10: Yes. The Treasury Department and the IRS understand that some employers are considering making amounts available under standalone retiree-only HRAs to retired employees so that the employer would be able to reimburse medical expenses, including the purchase of an individual health insurance policy. For this purpose, the standalone HRA would constitute an eligible employer-sponsored plan under Code §5000A(f)(2), and therefore the coverage would constitute minimum essential coverage under Code §5000A, for a month in which funds are retained in the HRA (including amounts retained in the HRA during periods of time after the employer has ceased making contributions). As a result, a retiree covered by a standalone HRA for any month will not be eligible for a Code § 36B premium tax credit for that month. Note that unlike other HRAs, the market reforms generally do not apply to a retiree-only HRA and therefore would not impact an employer’s choice to offer a retiree-only HRA.(10)
Question 11: How are amounts newly made available under an HRA treated for purposes of Code § 36B?
Answer 11: An individual is not eligible for individual coverage subsidized by the Code § 36B premium tax credit if the individual is eligible for employer-sponsored coverage that is affordable (premiums for self-only coverage do not exceed 9.5 percent of household income) and that provides minimum value (the plan’s share of costs is at least 60 percent). If an employer offers an employee both a primary eligible employer-sponsored plan and an HRA that would be integrated with the primary plan if the employee enrolled in the plan, amounts newly made available for the current plan year under the HRA may be considered in determining whether the arrangement satisfies either the affordability requirement or the minimum value requirement, but not both. Amounts newly made available for the current plan year under the HRA that an employee may use only to reduce cost-sharing for covered medical expenses under the primary employer-sponsored plan count only toward the minimum value requirement. See Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78 Fed. Reg. 25909, 25916 (May 3, 2013) (proposed regulations, to be codified, in part, once final, at 26 C.F.R.§1.36B-6(c)(4), (c)(5)). Amounts newly made available for the current plan year under the HRA that an employee may use to pay premiums or to pay both premiums and cost-sharing under the primary employer-sponsored plan count only toward the affordability requirement. See Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78 Fed. Reg. 25909, 25914 (May 3, 2013) (proposed regulations; to be codified, in part, once final, at 26 C.F.R. §1.36B-2(c)(3)(v)(A)(5)).
Even if an HRA is integrated with a plan offered by another employer for purposes of the annual dollar limit prohibition and the preventive services requirements (see Q&A 4 of this Technical Release), the HRA does not count toward the affordability or minimum value requirement of the plan offered by the other employer. Additionally, if an employer offers an HRA on the condition that the employee does not enroll in non-HRA coverage offered by the employer and instead enrolls in non-HRA coverage from a different source, the HRA does not count in determining whether the employer’s non-HRA coverage satisfies either the affordability or minimum value requirement.
For purposes of the Code § 36B premium tax credit, the requirements of affordability and minimum value do not apply if an employee enrolls in any employer-sponsored minimum essential coverage, including coverage provided through a Code §125 plan, an employer payment plan, a health FSA, or an HRA, but only if the coverage offered does not consist solely of excepted benefits. See 26 C.F.R.§1.36B-2(c)(3)(vii). If an employee enrolls in any employer-sponsored minimum essential coverage, the employee is ineligible for individual coverage subsidized by the Code § 36B premium tax credit.
Question 12: Section 125(f)(3) of the Code, effective for taxable years beginning after December 31, 2013, provides that the term “qualified benefit” does not include any QHP (as defined in ACA § 1301(a)) offered through an Exchange.(11) This prohibits an employer from providing a QHP offered through an Exchange as a benefit under the employer’s Code §125 plan. Some states have already established Exchanges and employers in those states may have Code § 125 plan provisions that allow employees to enroll in health coverage through the Exchange as a benefit under a Code §125 plan. If the employer’s Code §125 plan operates on a plan year other than a calendar year, may the employer continue to provide the Exchange coverage through a Code §125 plan after December 31, 2013?
Answer 12: For Code § 125 plans that as of September 13, 2013 operate on a plan year other than a calendar year, the restriction under Code § 125(f)(3) will not apply before the first plan year of the Code § 125 plan that begins after December 31, 2013. Thus, for the remainder of a plan year beginning in 2013, a QHP provided through an Exchange as a benefit under a Code § 125 plan will not result in all benefits provided under the Code § 125 plan being taxable. However, individuals may not claim a Code § 36B premium tax credit for any month in which the individual was covered by a QHP provided through an Exchange as a benefit under a Code § 125 plan.
IV. Applicability Date and Reliance Period
This Technical Release applies for plan years beginning on and after January 1, 2014, but the guidance provided in this Technical Release may be applied for all prior periods. If legislative action by any State, local, or Indian tribal government entity is necessary to modify the terms of a pre-existing HRA, a health FSA that does not qualify as excepted benefits, an employer payment plan, or other similar arrangement, sponsored by any State, local, or Indian tribal government entity, as an employer, to avoid a failure to comply with the market reforms (including action to terminate such arrangement) and such action may only be taken by a State, local, or Indian tribal government entity legislative body, the applicability date of the portions of this Technical Release under which such arrangement would otherwise fail to comply with the market reforms is extended to the later of (1) January 1, 2014, or (2) the first day of the first plan year following the first close of a regular legislative session of the applicable legislative body after September 13, 2013.
V. For Further Information
The Departments have coordinated on the guidance and other information contained in this Technical Release. The guidance in this Technical Release is being issued in substantially identical form by the Treasury Department, and guidance is being issued by HHS to reflect that HHS concurs in the application of the laws under its jurisdiction as set forth in this Technical Release. Questions concerning the information contained in this Technical Release may be directed to the IRS at 202-927-9639, the DOL’s Office of Health Plan Standards and Compliance Assistance at 202-693-8335, or HHS at 410-786-1565. Additional information for employers regarding the Affordable Care Act is available at www.healthcare.gov, www.dol.gov/ebsa/healthreform, and at www.business.usa.gov.
________________________________________ Footnotes
1. The “Affordable Care Act” refers to the Patient Protection and Affordable Care Act (enacted March 23, 2010, Pub. L. No. 111-148) (ACA), as amended by the Health Care and Education Reconciliation Act of 2010 (enacted March 30, 2010, Pub. L. No. 111-152), and as further amended by the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (enacted April 15, 2011, Pub. L. No. 112-10).
2. Section 1001 of the ACA added new PHS Act §§ 2711-2719. Section 1563 of the ACA (as amended by ACA §10107(b)) added Code §9815(a) and ERISA § 715(a) to incorporate the provisions of part A of title XXVII of the PHS Act into the Code and ERISA, and to make them applicable to group health plans and health insurance issuers providing health insurance coverage in connection with group health plans. The PHS Act sections incorporated by these references are sections 2701 through 2728. Accordingly, these referenced PHS Act sections (i.e., the market reforms) are subject to shared interpretive jurisdiction by the Departments.
3. See the preamble to the Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act, 75 Fed. Reg. 34538, 34539 (June 17, 2010). See also Affordable Care Act Implementation FAQs Part III, Question 1, available at http://www.dol.gov/ebsa/faqs/faq-aca3.html and at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs3.html.
4. The Departments previously addressed HRAs and the requirements under PHS Act § 2715 (summary of benefits and coverage and uniform glossary). See 77 Fed. Reg. 8668, 8670-8671 (February 14, 2012); see also Affordable Care Act Implementation FAQs Part VIII, Question 6, available at http://www.dol.gov/ebsa/faqs/faq-aca8.html and at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html and see page 1 of the Instruction Guide for Group Coverage, available at http://www.dol.gov/ebsa/pdf/SBCInstructionsGroup.pdf.
5. See ACA § 1302(b) for the definition of “essential health benefits”.
6. See Affordable Care Act Implementation FAQs Part XI, available at http://www.dol.gov/ebsa/faqs/faq-aca11.html and at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs11.html.
7. Small group market plans will not be considered to fail to meet qualified health plan certification standards based solely on the fact that they exclude coverage of pediatric dental benefits that are otherwise required under ACA § 1302(b)(1)(J) where a stand-alone dental plan is also available. See ACA § 1302(b)(4)(F) and Question 5, CMS QHP Dental Frequently Asked Questions, May 31, 2013, https://www.regtap.info/uploads/library/PM_QHP_DentalFAQsV2_5cr_060313.pdf.
8. An HRA is paid for solely by the employer and not provided pursuant to salary reduction election or otherwise under a Code § 125 plan. IRS Notice 2002-45, 2002-02 CB 93.
9. Under the interim final rules implementing the annual dollar limit prohibition, a health FSA is not subject to the annual dollar limit prohibition, regardless of whether the health FSA is considered to provide only excepted benefits. See 26 C.F.R. §54.9815-2711T(a)(2)(ii), 29 C.F.R. §2590.715-2711(a)(2)(ii), and 45 C.F.R. §147.126(a)(2)(ii). See Q&A 8 of this Technical Release regarding the restriction of the exemption from the annual dollar limit prohibition to a health FSA that is offered through a Code § 125 plan.
10. See the preamble to the Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act, 75 Fed. Reg. 34538, 34539 (June 17, 2010).
11. This rule does not apply with respect to any employee if the employee’s employer is a qualified employer (as defined in ACA § 1312(f)(2)) offering the employee the opportunity to enroll through an Exchange in a qualified health plan in a group market. See Code § 125(f)(3)(B).
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October 1, 2013 – COBRA has not been eliminated under Health Reform. All the same rules and regulations continue for health plans including those for vision and dental. On May 8, 2013 the Department of Labor (DOL) issued a revised model notice which added additional language to the qualifying event notice. This was intended to inform individuals of additional options with guaranteed issue health insurance policies provided through the public marketplace/exchange. For those who qualify, they could be eligible for a subsidy.
Although Health Reform offers an alternative to COBRA though the marketplace/exchange, many other provisions of PPACA have a direct impact on COBRA. As an example, PPACA extended coverage for dependent covered children to age 26. When the coverage ends, employers subject to COBRA must extend the offer of COBRA to those children to allow coverage to age 29. Some of the other provisions that impact COBRA include the appeals process, lifetime limits, and the stability period.
Even with the marketplace/exchange option, COBRA could be better. You know your current health plan, deductibles, co-pays, and co-insurance and it may be hard to find a match in the marketplace/exchange. Rates could be higher too. It’s important to review if you have met your deductible, co-insurance or max out of pocket, otherwise, you could be starting over. There is more to consider than a subsidy and that’s a good reason why COBRA is here to stay.
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Online ACA enrollment for small businesses delayed
News outlets around the country reported this afternoon that small businesses seeking to buy health insurance under President Barack Obama’s health care law will have to wait a couple of months before they can complete the process online, according to Obama Administration officials today.
On Tuesday, Oct. 1, the online health insurance markets (also known as SHOP exchanges) created by the ACA law for individuals and small businesses are scheduled to open. Small- business owners will still be able to go online, compare options and start an application, but they won’t be able to finalize it until sometime in November. That would still allow the firms to get coverage for their employees by Jan. 1.
As the MBPA gets more information about this change, we will continue to inform our members.
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As many of you are aware the Michigan Business & Professional Association launched its Health Care Reform Connect™ website and e-publication last fall.
We wanted to take a moment to keep you informed on what we have been working on as it related to supporting Michigan business through the implementation of health care reform. Here are several updates in case you missed one:
The development and launch of Health Care Reform Connect™ last fall has resulted in thousands of visits to our website by Michigan businesses and independent agents who are looking for a reliable source on health care reform and a source for their reform questions.
We have been hosting health care reform seminars, monthly webinars, and reform conferences across the state with several hundred attendees who have learned about the impact of health care reform on their business.
We have published numerous health care reform articles from various subject matter experts from around the country – available via our secured site as downloadable PDF’s.
Our team has spent countless hours lobbying at the State and Federal level on health care reform and the impact on Michigan Businesses and its employees.
We have launched a dozen health care reform tools such as our Small Business Health Care Reform Guide, Tax Credit and FTE Calculators, Health Care Reform Timeline, and Reform Roadmap, to name a few, to help Michigan businesses and their agents through health care reform.
We have hosted dozens’ of onsite meetings with members and agents to help educate them on health care reform.
We have developed a reform “hotlink” giving members and their agents the opportunity to ask their specific health care reform questions with a typical answer back in 24 hours. This free service for our members has saved them countless hours and helped to clear the fog on reform.
Health care reform alerts and e-publication available to members and agents. Each month we send out an updated e-publication via our Health Care Reform Connect™ brand with an overview of new tools, articles and white papers on reform. We also send out timely reform alerts when various federal departments make announcements regarding reform.
Please feel free to connect with our team today to ensure you and your clients are receiving our health care reform communications P: 888.277.8800 / E: info@michbusiness.org
https://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.png00michbusinesshttps://michbusiness.com/wp-content/uploads/2023/08/MichBusiness_logo_horizontal.pngmichbusiness2013-09-24 16:00:552015-10-08 00:00:00Agent Health Care Reform Connect™ – Updates