On September 13, 2013, the Department of Labor (DOL) issued “Technical Release No. 2013-03” entitled “Application of Market Reform and other Provisions of the Affordable Care Act (ACA) to health reimbursement arrangements (HRAs), health flexible spending arrangements (Health FSAs), and certain other Employer Healthcare Arrangements” to help clarify the rules and how they apply. This Technical Release applies for plan years beginning on and after January 1, 2014. The Technical Release encompasses questions and answers as well as examples of how it would apply to concrete cases.
The Technical Release provides guidance on the application of certain provisions of the Affordable Care Act to the following types of arrangements: (1) HRAs, including HRAs integrated with a group health plan; (2) group health plans under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy, such as a reimbursement arrangement described in Revenue Ruling 61-146, 1961-2 CB 25, or arrangements under which the employer uses its funds to directly pay the premium for an individual health insurance policy covering the employee (collectively, an employer payment plan); and (3) certain health FSAs. The Technical Release also offers guidance under on section 125(f)(3) of the Internal Revenue Code (Code) and on employee assistance programs or EAPs.
The Affordable Care Act (ACA) provides amendments the Public Health Services Act (PHSA) to impose certain “market reform” requirements on group health plans. More specifically, two of these requirements directly affect an employer’s ability to pay for individual health insurance policies.
1) Annual dollar limit prohibition: PHSA §2711 provides that a group health plan or health insurance issuer offering group health insurance coverage may not establish any annual limit on the dollar amount of benefits for essential health benefits for any individual. According to the DOL, HRA(arrangement that is funded solely by an employer) is considered a health plan, and thus is subject to ACA market reforms including the prohibition on annual and lifetime maximums. Since HRAs, by definition, limit the benefits paid to some maximum amount, they would generally violate PHS Act §2711. However, there is an exception for HRAs that are integrated with a group health plan and for retiree-only HRAs (provided they meet the given requirements).
2) Preventive service requirement: PHSA §2713 requires non-grandfathered group health plans or health insurance issuers offering group health insurance plans to provide certain preventive services without imposing any cost-sharing requirements for these services.
The Departments of the Treasury (Treasury Department), Health and Human Services (HHS), and Labor (DOL) (collectively, the Departments) are working together to develop coordinated regulations and other administrative guidance to assist stakeholders with implementation of the Affordable Care Act. The guidance provided in the Technical Release is being issued in substantially identical form by the Treasury Department, and guidance is being issued by HHS to reflect that HHS concurs in the application of the laws under its jurisdiction as set forth in the Technical Release.
If you believe your rights as an employee may have been breached, please contact The Harman Firm, LLP.