Final Rule Issued Allowing HRAs to be Used for Individual Coverage

Posted on Jun 17, 2019 in Health Care Reform

Final Rule Issued Allowing HRAs to be Used for Individual Coverage
June 17, 2019

On June 13, the U.S. Departments of the Treasury, Labor, and Health and Human Services (tri-agencies) issued a final rule allowing employees to use the dollars in employer-funded Health Reimbursement Arrangements (HRAs, also called Health Reimbursement Accounts) to purchase individual coverage both on and off the public Marketplace (or Exchange). The rule also creates a new excepted benefit HRA (EBHRA) to enable employees to be reimbursed for excepted benefit costs. This finalizes a proposed rule issued in Oct. 2018 largely as proposed, but with some modifications. The rule follows through on an Executive Order that directed the tri-agencies to consider ways to expand the flexibility of HRAs. 

Individual Coverage HRAs
Beginning Jan. 1, 2020, employers can offer individual coverage HRAs (ICHRAs) to provide tax-exempt dollars to their employees for the purchase of Affordable Care Act (ACA)-compliant individual coverage, but not the less comprehensive, short-term, limited duration insurance (STLDI) coverage. Under the final rule:

  • Employees can use ICHRA funds to pay the premium for individual insurance coverage purchased either on or off the public Marketplace.
  • Employers can offer their employees either a group health plan or an ICHRA, but not both.
    • Offering an ICHRA will satisfy the Section 4980H Employer Mandate, if it meets the affordability threshold.
    • Employees can opt out of an ICHRA if they are eligible for premium tax credits on the public Marketplace.
  • Employers are required to make the ICHRA available to entire “classes” of employees (e.g., full-time, part-time, or seasonal workers).
    • In response to comments received on the proposed rule, the final rule includes a minimum class size requirement based on employer size.
      • <100 employees: minimum class of 10 employees
      • 100-200 employees: minimum class of 10% of total employees
      • >200 employees: minimum class of 20 employees
  • Employers must provide a written notice to employees at least 90 days prior to the start of the plan year that details the terms of the ICHRA. The tri-agencies will provide a model notice.
  • The total funds offered through an ICHRA may vary in two instances: as the age of the participant increases (not to exceed a 3:1 age band), and based on the number of dependents covered.
  • A new individual market Special Enrollment Period (SEP) has been established for when an employee or their dependent gains access to an ICHRA.

Excepted Benefit HRAs
Under the final rule, employers that offer traditional group health coverage can offer EBHRAs of up to $1,800 per year to reimburse employees for certain medical expenses, including stand-alone dental or vision benefits or premiums for STLDI coverage. The maximum amount will be indexed annually after 2020. Employees do not need to be enrolled in a group health plan to use EBHRA funds, and an employer cannot offer both an ICHRA and EBHRA. 

The tax treatment of HRAs remains unchanged. The final rule can be read in detail here

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IRS Extends Deadline for Supplying ACA Forms to Employees

Posted on Jan 26, 2018 in Health Care Reform

The IRS issued Notice 2018-06 on Dec. 22, 2017, which extended by 30 days the 2018 due date for distributing 2017 health coverage information forms 1095-C or 1095-B to employees, regarding the health care coverage offered to them.

The new deadline for supplying these forms to employees is March 2, 2018. This 30-day extension is automatic. Employers and providers don’t have to request it.

The due dates for filing 2017 information returns with the IRS were not extended, however. For 2018, the due dates to file information returns with the IRS remain Feb. 28 for paper filers or April 2 for electronic filers.

Notice 2018-6 also extended good-faith transition relief to 2017 information reporting. This relief applies only to incorrect and incomplete information reported on Form 1095-C or 1095-B, and not to a failure to timely furnish or file the forms.

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Information on 1095 Reporting for Plan year 2017

Posted on Jan 26, 2018 in Health Care Reform

During the first week of October 2017, the Internal Revenue Service published final forms and instructions to help employers prepare for reporting on health coverage they offered to their employees in 2017 year. The forms must be distributed to employees and filed with the IRS early in 2018 by employers subject to the Affordable Care Act’s (ACA’s) reporting requirements.

Below are links to the final forms and instructions on the IRS website:

The IRS had released draft versions of these forms and instructions in September.

The instructions to the Forms 1094-C and 1095-C were released with a few changes:

  • Form 1094-C: A box in Line 22 called “Section 4980H Transition Relief” has been removed. It is not applicable in 2017.
  • Forms 1095-B and 1095-C: A paragraph called “Additional information” in the instructions for recipients directs individuals to an IRS webpage providing information on the individual and employer shared-responsibility provisions and premium tax credits.
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How Much Life Insurance Does a Stay at Home Spouse need?

Posted on Jul 25, 2017 in Success ideas

When deciding how much life insurance a person needs, Financial Planners recommend an amount of 7 to 10 times your annual income.

But what if you don’t have any annual income? What if you are a full-time, stay at home spouse and parent? Do you need a life insurance policy if you have no income?

Well, in a way, yes. In fact, as a stay at home spouse or parent, you make hugely valuable contributions to the household. Contributions that could cost thousands should something happen to you.

According to a recent Salary.com survey in 2016, the value of a stay at home parent would be about $143,000 if you had to outsource those jobs. These services include those provided by a typical homemaker which include a housekeeper, child care, a driver for the kids, and more.

But how much does this stay at home spouse or parent need for life insurance? $1,000,000? Probably not. Use the following as a guide.

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Common Health Insurance Definitions

Posted on Jul 16, 2017 in Success ideas

The challenge with health insurance is that we hear about it once a year during open enrollment, and the next time we use it we are either not feeling well, or checking out at the pharmacy or doctor’s office. You’ve heard about the following terms, now you’ll know what they mean:

Copay – a preset amount you pay for a covered health care service, such as a doctor visit or prescription. You pay the set amount, your health plan pays the rest.

Deductible – an annual amount you’ll pay before your health plan begins to pay for certain covered services.

Coinsurance – your share of the cost of covered health care services after the deductible has been met. Your health plan pays the rest of the covered charges.

Out-of-Pocket Maximum – the most you’ll pay before your health plan begins to pay 100% of covered medical services. In many cases, your deductible, coinsurance, and copays counts towards your total out-of-pocket maximum. Check your health plan for details.

In-Network – health care facilities, doctors, and pharmacies that have contracts with your health insurance plan to deliver services at a negotiated rate or discount. You will typically have lower out-of-pocket costs for services you receive in-network.

Out-of-Network – a health care facility, doctor, or pharmacy that does not have a contract with your health insurance plan. They typically don’t provide services at a discounted rate and you will have higher out-of-pocket costs.

Primary Care Provider – also known as a PCP, this is your personal health care provider who coordinates all of your medical care, from routine physicals to referring you to specialists. This physician gets to know you, your medical history, and your personal preferences, which can be very valuable.

Pre-certification – pre-certification is getting approval from your health insurance plan before receiving services such as hospital stays, advanced testing, or outpatient procedures. During this process, your health insurance plan reviews medical criteria to determine coverage under your health insurance plan.

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