New HRA Integration Rules

As we head into the 2017 open enrollment season, it’s important to be aware of regulatory changes that could impact employer decisions on which group health and welfare packages are best suited for their employees.

The IRS has issued Notice 2015-87. It requires all HRA plans to be integrated with a group health insurance plan. It also states that HRAs may only be offered to employees who participate in a group health insurance plan, including spouses and dependents.

There are two key components that may affect your HRA beginning January 1, 2017:

1. HRA plans must now be “integrated” with a group health plan that meets ACA market reform.

HRAs can no longer reimburse employees for premiums paid for individual medical coverage. Fortunately, there are a couple of exceptions to this rule:

• The HRA can continue to reimburse for individual dental or vision plans (also known as excepted benefits).

• An employer can open a post-employment reimbursement account (PRA) separate from the integrated HRA that covers only terminated or retired employees as they are not subject to integration requirements.

2. An HRA cannot reimburse medical expenses for spouse or dependents that are not covered by an employer-sponsored group health plan. This group health plan can be sponsored by the employer OR presumably by the spouse and/or dependent’s employer.

It is imperative that employers review their plan documents to ensure they remain in compliance with Health Care Reform. It’s also important to ensure that employees fully understand the rules governing spouse and dependent coverage.

Please feel free to contact us if you have questions or need assistance understanding your integrated HRA.