USA: Healthcare: Compliance Fast Facts

This article was contributed by Alliant, Asinta’s US Partner

Integrating Health Reimbursement Accounts (HRAs) with Other Group Health Coverage

HRAs are group health plans and generally subject to ACA rules, including the requirement to provide preventive care and the prohibition on annual dollar limits. The only way HRAs can survive in most cases is to be integrated with a major medical plan that abides by these rules. Regulatory guidance states that an employer-sponsored HRA cannot be integrated with individual market coverage. Therefore, an HRA used to purchase coverage on the individual market will fail to comply with the ACA rule prohibiting annual dollar limits and requiring preventive care coverage.

We have seen scenarios in the market where other brokers state that employers can reimburse individual insurance plans with a “Section 105 Medical Reimbursement Plan.” However, we believe this arrangement is an illegal HRA. The plan would not be ACA-compliant (despite representations to the contrary) and would subject the plan to penalties of $100 per participant per day for violations of the rules on dollar limits and preventive care (so $200 per participant per day total).

Other questions coming up in the marketplace are around the possibility of integrating one employer HRA coverage with other employer coverage – which can be done. Existing guidance describes two methods for achieving integration —one that imposes a minimum value condition on the non-HRA coverage (the “minimum value method”), and one that limits the types of expenses that may be reimbursed by the HRA (the “limited reimbursement method”). Under both methods, the HRA and the non-HRA do not need to share the same plan document, have the same administrator, or file a single Form 5500 to be integrated. Both methods impose these four requirements:

• The employer sponsoring the HRA must offer a group health plan (other than the HRA ) that does not consist solely of excepted benefits;
• Employees receiving the HRA must actually be enrolled in another group health plan that does not consist solely of excepted benefits (regardless of who offers that other plan—e.g., it could be the plan of a spouse’s employer);
• The HRA must be available only to employees who are actually enrolled in another group health plan (again, it does not matter who offers that other plan);
• Employees (and former employees) must be offered the opportunity to permanently opt-out of and waive future reimbursements from the HRA at least annually. And on termination of employment, the HRA must either be forfeited or it must allow the employee to permanently opt out and waive future reimbursements.

If the non-HRA coverage described in the first three common requirements listed above provides minimum value, the HRA can reimburse any type of otherwise permissible expense. However, if minimum value is not provided by the non-HRA coverage in any of those requirements, the HRA can reimburse only co-payments, co-insurance, deductibles, and premiums under the non-HRA with which it is integrated, plus medical care expenses that are not essential health benefits. Finally, the agency guidance indicates that HRA balances credited while the HRA was integrated with another group health plan may still be used to reimburse expenses in accordance with the HRA’s terms after participants cease to be covered under the other group health plan.

We have yet to see an HRA integrated with another employer’s plan. If your client wishes to go down this path it is worth having a debrief with the HRA administrator about how this works, how other coverage is verified, etc.
Thanks again to Alliant, Asinta’s US Partner for contributing this article.

Fact: Asinta Partnership can provide vetted employee benefit advice in 50 countries via our partners and 42 by correspondence.