EBSA guidance includes clarification of effect of CURES Act on HRAs

The EBSA has issued frequently asked questions (FAQs) addressing special enrollment for group health plans, coverage of preventive services, and health reimbursement arrangements (HRAs), as impacted by the implementation of the ACA, HIPAA, and the recently-enacted 21st Century Cures Act (Cures Act; P.L. 114-255). The FAQs were prepared jointly by the Departments of Labor, Treasury, and Health and Human Services.

Special enrollment period eligibility. A special enrollment period must generally be offered when employees or their dependents lose eligibility for any group health plan or health insurance coverage in which any of them were previously enrolled, or in certain circumstances when an employer terminates contributions towards coverage. The special enrollment period also must be offered upon certain life events, such as birth, marriage, or adoption, and for new eligibility or loss of coverage under the Children’s Health Insurance Program (CHIP). A notice of this special enrollment period is required at or before the time an employee is first offered the opportunity to enroll in a group health plan.

The EBSA is now clarifying that, if an individual is enrolled in individual market coverage, and this includes coverage purchased through a state Exchange, and the individual loses eligibility for that coverage, he or she is entitled to a special enrollment period in any employer-sponsored group health plan that he or she is eligible for, and had previously declined to enroll in. This does not include instances in which someone loses coverage for their failure to pay premiums. The eligibility for a special enrollment period in a group health plan exists regardless of whether or not an individual may enroll in any other individual market coverage, including coverage in a state Exchange.

Coverage of preventive services. Under Public Health Service Act (PHSA) Sec. 2713, non-grandfathered group health plans and health insurance coverage offered in the individual or group market must not impose cost-sharing requirements on certain preventive services. The Health Resources and Services Administration (HRSA) updated its Women’s Preventive Services Guidelines on December 20, 2016, and the EBSA is reminding the public that women’s preventive services must be covered in accordance with these updated guidelines, without cost-sharing, for plan years beginning on or after December 20, 2017. Until then, non-grandfathered group health plans and health insurance issuers must abide by the previous HRSA guidelines and PHSA Sec. 2713. The update is available at www.hrsa.gov/womensguidelines2016.

HRAs for small employers. HRAs and employer payment plans (EPPs) generally fail to comply with the ACA’s group market reforms because they reimburse or pay employees’ medical expenses only up to a certain yearly dollar amount. Technical Release 2013-03 provided that an HRA will not fail to satisfy the group market reform provisions when integrated with a group health plan in accordance with guidance in the technical release. Final regulations issued November 18, 2015 (80 FR 72192) reiterated that neither an HRA nor an EPP may be integrated with individual market policies to satisfy market reforms.

The Cures Act introduced the qualified small employer health reimbursement arrangement (QSEHRA), which is a tax-preferred arrangement for small employers to use to help employees pay for medical expenses. The Cures Act states that a QSEHRA is not a group health plan. The FAQs contain detailed information on QSEHRAs.

More specifically, the FAQs provide that QSEHRAs must be funded solely by eligible employers, and may include no salary reduction contributions, and they must provide for payment to or reimbursement of medical care expenses incurred by an employee or the employee’s family members (as set forth in Code Sec. 213(d)). Eligible employers do not include applicable large employers (those with at least 50 full-time employees), or those employers offering group health plans to any employees. Payments and reimbursements for any year may not exceed $4,950 ($10,000 for QSEHRAs that include an employee’s family members), and QSEHRAs must be provided on the same terms to all of an employer’s eligible employees, except that certain variations are permitted in accordance with the variation in the price of an insurance policy based on age or number of family members.

The FAQ advises that, because QSEHRAs are statutorily excluded from the definition of a group health plan, group market reform requirements do not apply, effective for plan years beginning after December 31, 2016. The FAQ also states that, in accordance with an extension provided under the Cures Act, for plan years beginning on or before December 31, 2016, the excise tax under Code Sec. 4980D for failure to satisfy market reforms will not be applied for EPPs that pay, or reimburse employees for, individual health policy premiums or Medicare Part B or Part D premiums, on employers otherwise eligible for the same relief that was previously provided under Q&A 1 of Notice 2015-17, and the filing of IRS Form 8928 is not required solely for having such an arrangement. The relief as it was previously provided under Q&A 1 of Notice 2015-17 was limited to periods before July 1, 2015. This relief does not extend to stand-alone HRAs or other arrangements reimbursing employees for medical expenses other than insurance premiums.

Also, an HRA or EPP that is not a QSEHRA, but that is eligible for the extended relief date under the Cures Act, would provide employer-provided group health coverage, and would be considered minimum essential coverage. Therefore, an individual with that coverage would not be eligible for a premium tax credit for coverage through his or her state Exchange.

SOURCE: FAQs about Affordable Care Act Implementation (Part 35), December 20, 2016.

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