The Center for Consumer Information & Insurance Oversight has issued guidance that exempts stand-alone Health Reimbursement Arrangements (HRAs) in effect prior to Sept. 23, 2010 from having to comply with the Affordable Care Act's annual limit requirements for plan years beginning before Jan. 1, 2014.
Background on Restricted Annual Limits Under the Affordable Care Act
The Affordable Care Act generally prohibits group health plans from imposing lifetime or annual limits on the dollar value of health benefits, but allows "restricted annual limits" with respect to essential health benefits for plan years beginning before January 1, 2014. Restricted annual limits may be waived if compliance with the rules would result in a significant decrease in access to benefits or a significant increase in premiums.
Exemption for Stand-Alone HRAs
An HRA is a self-insured medical reimbursement plan funded solely by employer contributions and not through salary reduction that:
- Reimburses some or all of the medical care expenses of participating employees, spouses and dependents up to a maximum dollar amount for a coverage period; and
- Allows participants to carry forward unused amounts remaining at the end of the coverage period for use in subsequent coverage periods.
According to the guidance, all HRAs set limits on the amount that can be spent and those limits would always be less than the applicable restricted annual limit amounts, so applying the annual limit restrictions would result in a significant decrease in access to HRA benefits.
As a result, the guidance exempts all stand-alone HRAs that were in effect prior to Sept. 23, 2010 from having to apply individually for an annual limit waiver for plan years beginning on or after Sept. 23, 2010 but before Jan. 1, 2014. Note that an HRA that is integrated with other health coverage that complies with the annual limit requirements (or obtains a waiver) would not need to apply for a separate waiver.
Record and Notice Requirements Still Apply
An HRA that is exempt from applying for an annual limit waiver still must comply with the record retention and annual notice requirements to participants and subscribers set forth in previous guidance.