HRAs

[David]

Everything I have read regarding HRAs is that effective 7/1/15 companies can no longer offer these to employees to help pay for their individual health care premiums and other medical expenses.

A client with less than 50 employees uses this arrangement for their employees and told the employees to get their health insurance through the exchange or wherever they choose. I advised the client that they could no longer provide the HRA and if they continued they would be subject to penalties. The client called back and said that their HRA administrator told them that as long as the employee was getting their individual health insurance through the exchange then the HRA is still compliant.

Has anyone seen any cites that confirm what the HRA administrator says? I haven't seen anything that supports that stance.

I also have another client, a pastor, who has his and his family's health care provided by Medi-Share, a christian medical sharing program. This program is compliant with the ACA. The church also has an HRA arrangement with the pastor to reimburse him for his premiums and other medical expenses.

Is the HRA also non compliant in this situation?

If ALL HRAs are no longer compliant, even if employees get their insurance through the approved exchanges, and the employer continues to offer the HRA, are they not subject to the $100/day/employee penalty if they include the amounts paid through the HRA as taxable wages?

Thanks.

[Lee B]

 

I also have another client, a pastor, who has his and his family's health care provided by Medi-Share, a christian medical sharing program. This program is compliant with the ACA. The church also has an HRA arrangement with the pastor to reimburse him for his premiums and other medical expenses.

Is the HRA also non compliant in this situation?

I

 

There was lengthy discusion on the ATX Board about medical sharing programs several months ago so I did

 quite a bit reading about the subject. Medi-share is most definitely not ACA compliant !

[Randall]

I remember that discussion.  Something about a late 2014 DOL ruling.  IRS extended the previous conditions to 6/30/2015.  Has anyone heard anything about IRS ruling on that beyond 6/30?  As I recall, we were uncertain how to treat 2% S Corp shareholders.  My understanding now is that the S Corp shareholder will have to include premiums paid in his W2 not only for income tax purposes but also social security and medicare tax purposes.  I would also advise shareholder to pay his premiums with a personal check and not a business check.  Then shareholder also take SE health insurance deduction on 1040 p.1.  For other employees, if employer wants to help employees with their health insurance, the additional pay must be included in W2 and have no restrictions on how employee spends the money. 

[Catherine]

There was lengthy discusion on the ATX Board about medical sharing programs several months ago so I did

 quite a bit reading about the subject. Medi-share is most definitely not ACA compliant !

I thought Medi-Share was specifically excluded from the ACA.  Which says nothing useful about your question, unfortunately.

[Lee B]

A narrowly written individual exemption was passed for recognized medical sharing arrangements.

Medishare was one of three recognized medical sharing arrangements that qualified for the individual exemption.

An individual exemption from the requirement to have ACA Compliant coverage clearly does not make

medical  sharing arrangements ACA compliant, because clearly they are not.

[Lee B]

After reviewing my reference materials:

1.  Standalone HRAs for two or more employees are not in compliance with the Market Reforms

2.  HRAs are prohibited unless integrated with an ACA compliant group health plan.

3.  HRAs for ancillary benefits, i.e. dental and vision are allowed.

You don't say whether there are any other employees at your pastor client's church.

If your client is the only employee then the HRA does not fall under the ACA market reforms.

If I were you, I would advise the first client to request a substantive detailed cite from the HRA administrator

for their position.

[David]

Thanks for your help with this. 

Yes, I was surprised that the first client's HRA administrator told them they were in compliant but I thought I would check with the forum to see if the administrator had information that I couldn't find anywhere.

Regarding the pastor, I'm sure there is an admin or other employees. If the other employees are covered by their spouse's employer health coverage and the pastor is the only employee that is covered, then isn't the HRA OK since it is tied to Medi-Share, an ACA allowed plan?

Thanks.

[easytax]

Thanks for your help with this. 

Yes, I was surprised that the first client's HRA administrator told them they were in compliant but I thought I would check with the forum to see if the administrator had information that I couldn't find anywhere.

Regarding the pastor, I'm sure there is an admin or other employees. If the other employees are covered by their spouse's employer health coverage and the pastor is the only employee that is covered, then isn't the HRA OK since it is tied to Medi-Share, an ACA allowed plan?

Thanks.

Possibly "suggest" that your client have the HRA administrator give a written guarantee that they are covered without penalty and that the HRA administrator is willing to "cover/pay" the $100 a day penalty if they are wrong.     My thoughts are that they will find a way to walk-a-way from their comment.    AND  --- if not, maybe they will have a way to advise all of us that this is possible.