Latest from ACA FAQs January 2013: Health Reimbursement Arrangements

Within the realm of employee benefit management, the ACA prohibits insurers from limiting the amount of coverage for lifetime or a calendar year. This applies to the dollar value of all essential health benefits. However, this ruling has created some confusion.

This is particularly true for the ongoing HRAs where annual limits exist and are in direct confliction of the ACA. This is the general pattern in HRAs across the nation where the unused dollar amount is carried forward to the future years. However, group plans or integrated plans where the HRA is a part of the total coverage and the group plan doesn’t impost lifetime or annual limits on coverage, there are no issues. This is because the combined benefit to the employee is in accordance with the rulings of the ACA.

The recent FAQ released for ACA mandates provides more guidance on the opportunity to integrate the HRAs. The idea is to promote the kind of coverage where prohibition on lifetime and annual dollar limits is sustained and the employee benefits are not compromised. However, there are certain limitations on the manner in which this kind of coverage integration is done. For instance, the FAQ for ACA 2013 state that coverage that is purchased from the individual market is not valid for such integration.

This means that the individual market purchased health insurance bought by the employee would be treated as standalone HRA and not integrated HRA. Standalone HRA cannot comply with the mandate of no prohibition on lifetime or annual limits. However, employer-sponsored insurance plans that are combined with the HRA can be treated as group health insurance coverage.

FAQs issued for the ACA 2013 also anticipate a greater degree of Grandfathering Rule applicability across all the HRAs. This essentially means that HRAs which were credited before January 1, 2013 can be used after December 31, 2013 for reimbursing medical expenses though they fail to comply with the mandate of prohibition on lifetime and annual dollar limits of health insurance.

Some other FAQs that were answered recently as an initiative to provide more information about the health care reforms address disclosure of information which is related to the PHS Act, i.e. related to firearms, and some issues related to prescription drug coverage for the self-insured that is applicable to supplementary Medicare Part D Coverage. Some information has also been provided related to multiemployer plans for using ERISA plan assets for paying the Patient Centered Outcomes Research Trust Fund Fees.