The Departments of the Treasury, Labor, and Health and Human Services jointly issued final regulations governing health reimbursement arrangements (HRAs). The final regulations allow integration of HRAs with individual health insurance coverage or Medicare, if certain conditions are satisfied. The rules also allow certain HRAs to be recognized as excepted benefits. The rules apply for plan years beginning on or after Jan. 1, 2020.
The rules create a new category of HRA, called an “individual coverage HRAs” or “ICHRAs”. In general, the regulations remove the prohibition on integrating an HRA with individual health insurance coverage, if certain conditions are met, and contain requirements that an HRA must meet to be integrated with individual health insurance coverage.
Under the new rules, an employer may integrate an HRA with individual health coverage only if:
The rules also created a new category of Excepted Benefit HRAs. Funds in an excepted-benefit HRA can reimburse medical care (as defined in IRC § 213(d)), such as copays, coinsurance, deductibles or expenses not covered by a primary plan. But an excepted-benefit HRA cannot reimburse premiums for individual health insurance, group health plan coverage (other than COBRA or other continuation coverage), or Medicare. However, this type of HRA may reimburse premium costs for other HIPAA excepted benefits, such as dental or vision coverage. Special rules apply as to whether an HRA may reimburse short-term, limited-duration insurance.
The final rules impose following requirements for excepted benefit HRA:
In addition to the release of the final rules, the Departments also released a FAQ document, Model Notice and Model Attestation.
Model Notice (link downloads a Word document)
Model Attestation (link downloads a Word document)
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This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.
Date Posted: June 18, 2019