HRA and FSA Guidance
This guidance confirms and clarifies prior guidance. Key provisions include:
HRAs for Active Employees – For plan years beginning in 2014, employers cannot offer a stand-alone HRA to employees. Employers can only offer HRAs that are integrated with a group health plan.
Integrated HRAs – For an HRA to be integrated with a group health plan, the following requirements must be met:
- The HRA is only available to employees enrolled in group coverage;
- The employer must offer a group health plan that provides minimum value or that does not consist solely of excepted health benefits.
- The employee must be enrolled in a group health plan (either the employer’s plan or another plan such as coverage through a spouse);
- If the group health plan is self-insured and does not cover certain Essential Health Benefits (EHBs), the HRA cannot be used to reimburse EHBs that are not covered by the group health plan; and
- The employee can waive future reimbursements from the HRA at least annually, and the remaining amounts in the HRA are forfeited if employment ends.
Retiree HRAs – A stand-alone retiree HRA that is used to pay health insurance premiums will be considered an employer-sponsored group health plan providing minimum essential coverage. As a result, a retiree covered by an HRA will not be eligible for premium tax credits through the Marketplace/Exchange.
FSAs – A health care FSA does not have to comply with PPACA if:
- The employer also offers group health plan coverage; and
- The maximum annual FSA benefits payable to any employee do not exceed two times the employee’s contribution (or, if greater, do not exceed $500 plus the employee’s contribution).
Employer Payment Plans – Employers may not reimburse an employee’s premiums or pay premiums directly to an insurance company to purchase individual health insurance for an employee.
EAPs – An employee assistance program (EAP) will generally be considered not subject to PPACA market reforms, provided that the EAP does not provide significant medical care benefits.
For more details, here is a link to the guidance: