The effect of the recent 21st Century Cures Act on health reimbursement arrangements (HRAs) was clarified by the U.S. Department of Labor (DOL) in a new round of frequently asked questions (FAQs).
FAQs About Affordable Care Act [(ACA)] Implementation Part 35, released December 20, was prepared jointly by DOL and the U.S. Departments of Health and Human Services (HHS) and the Treasury. It discusses the newly established “qualified small employer HRA” (QSEHRA) program, along with some other ACA interpretation issues regarding special enrollment and preventive care.
Guidance issued by DOL, HHS, and Treasury in 2013 indicated that HRAs and “employer payment plans” (EPPs) for individual insurance premiums were subject to the ACA group market requirements such as the ban on annual dollar limits—and would generally run afoul of these requirements because, by their terms, they maxed out at a set dollar amount. An HRA could still be in compliance if “integrated” with a compliant group health plan, but could not be integrated with individual policies in this way, the agencies added.
The Cures Act, which President Obama signed December 13 (Pub. L. 114-255), revived the stand-alone HRA option for certain small employers by creating a tax-deferred QSEHRA that is excluded from the “group health plan” definition. This provision takes effect for plan years beginning after December 31, 2016.
“Because a QSEHRA is statutorily excluded from the definition of a group health plan, the group market reform requirements do not apply to a QSEHRA,” DOL noted in one of the new FAQs. “With respect to EPPs and HRAs that do not qualify as QSEHRAs, the Departments’ prior guidance continues to apply.” This would include such arrangements offered by ACA-defined “applicable large employers” (ALEs) and others that do not meet the act’s eligibility requirements.
For plan years beginning on or before December 31, 2016, the Cures Act extended the transition relief the IRS provided in Notice 2015-17. This notice provided that employers that are not ALEs would not be penalized under the market reforms (e.g., no annual limits) for EPPs that pay or reimburse premiums for individual policies or Medicare Part B or D premiums.
“As noted in Q&A 1 of Notice 2015-17, the relief does not extend to stand-alone HRAs or other arrangements to reimburse employees for medical expenses other than insurance premiums,” DOL stated. “Consequently, the extension of the relief by the Cures Act is similarly limited to EPPs and does not extend to stand-alone HRAs or other arrangements to reimburse employees for medical expenses other than insurance premiums.”
Even if eligible for this extended relief, coverage by an HRA or EPP that is not a QSEHRA still would count as “minimum essential coverage” precluding eligibility for ACA Marketplace premium tax credits, DOL added.
A separate FAQ addressed the special enrollment rights of employees and dependents that lose Marketplace or other individual coverage. Health Insurance Portability and Accountability Act (HIPAA) portability rules generally require group health plans to offer a special enrollment period to employees or dependents who lose eligibility for other coverage that they had when group plan enrollment was previously offered.
This right does apply to employees and dependents, if otherwise eligible for the plan, when they lose eligibility for coverage in the individual market, including the Marketplace, DOL indicated. “These individuals will be eligible for special enrollment in the group health plan coverage regardless of whether they may enroll in other individual market coverage, through or outside of a Marketplace.”
DOL also addressed a question about the ACA’s preventive care requirements and the timeline for adopted new updates to guidelines on women’s preventive health services. The ACA requires nongrandfathered group health plans to cover certain preventive services without cost-sharing, including, for women, care and screenings provided for in comprehensive guidelines from HHS’ Health Resources and Services Administration (HRSA).
HRSA just updated these Women’s Preventive Services Guidelines on December 20. Plans and insurers must provide first-dollar coverage in accordance with these guidelines for plan years beginning on or after December 20, 2017, DOL stated. Until then, preventive care consistent with the previous HRSA guidelines must continue to be covered without cost-sharing.
The recent updates to the HRSA guidance were based on recommendations developed by the Women’s Preventive Services Initiative (WPSI), a coalition of national health professional organizations and consumer and patient groups with expertise in women’s health, DOL noted. The new guidelines build on recommendations from entities such as the United States Preventive Services Task Force.
David A. Slaughter, JD, is a Senior Legal Editor for BLR’s Thompson HR products, focusing on benefits compliance. Before coming to BLR, he served as editor of Thompson Information Services’ (TIS) HIPAA guides, along with other writing and editing duties related to TIS’ HR/benefits offerings. Mr. Slaughter received his law degree from the University of Virginia and his B.A. from Dartmouth College. He is an associate member of the Virginia State Bar.
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