No Way for Stand-Alone HRAs

The Department of Labor issued a new frequently asked questions document about PPACA implementation that addressed both employer exchange notification requirements and the future for stand-alone HRA plans. The FAQ formally delayed the requirement that all employers subject to the Fair Labor Standards Act (which is virtually all employers, not just those that offer health coverage) provide their employees with notice about the coming health insurance exchanges by March 1, 2013.

The frequently asked questions document from DOL addresses “stand-alone” health reimbursement arrangements offered by employers, meaning those HRA plans that are not integrated with a group major-medical policy offering. To date, when implementing PPACA, the Administration has always differentiated between integrated HRAs and those that are freestanding and serve as the employer’s primary means of providing benefits to employees. Integrated HRAs have always been considered exempt from the PPACA provisions directed at qualified health plans like rating requirements, benefit mandates and annual or lifetime limits, but it was left unclear as to how stand-alone HRAs would ultimately be treated. Stand-alone HRAs were given a blanket waiver by HHS from the law’s annual and lifetime limit provisions from 2011 until 2014, but now it has been made clear that the annual limit provisions will apply to HRAs moving forward. So in practical terms, that means employers will no longer be able to offer stand-alone HRA plans. Additionally, the FAQ clarifies that an employer-sponsored HRA may not be integrated with individual market coverage or with an employer plan that provides coverage through individual policies. Also, an employer-sponsored HRA may be treated as integrated with other coverage only if the employee receiving the HRA is actually enrolled in that coverage. So if you had an employer client asking if they could drop group coverage and use an HRA to help individuals purchase coverage through an exchange instead, this guidance clearly establishes the answer to that question is

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