The Wagner Law Group
Wagner Law Group, A Professional Corporation, is a nationally
recognized ERISA & employee benefits, estate planning,
employment, labor & human resources practice.
in 1996, The Wagner Law Group has 22 attorneys engaged
exclusively in employee benefits, estate planning and
employment law. Six of our attorneys are AV rated by
Martindale-Hubbell as having very high to preeminent legal abilities
and ethical standards. The firm is among the largest ERISA boutiques
in the country. Our practice is national in scope, with clients in
more than 40 states and several foreign countries.
Wagner Law Group
Fax: (561) 293-3591
7108 Fairway Drive
Palm Beach Gardens, FL 33418
East Kennedy Boulevard
Tampa, FL 33602
Francisco, CA 94104
100 South 4th Street, Suite 550
St. Louis, MO 63102
December 29, 2015
Health and Welfare Law
Guidance on Health Reimbursement Arrangements
has issued Notice 2015-87, which provides guidance on a myriad of
Affordable Care Act ("ACA") market reforms, including ACA
compliance issues raised by health reimbursement arrangements
Background. ACA generally prohibits group health
plans from imposing annual or lifetime dollar limits on
"essential health benefits." The IRS has previously
indicated that arrangements whereby employers reimburse employees for
medically-related costs are group health plans subject to the ACA's
market reforms. Accordingly, all such reimbursement
arrangements must satisfy ACA market reforms.
group health plans that typically reimburse medical expenses up to a
specified dollar amount. Thus, HRAs cannot satisfy certain ACA
market reforms, including the required coverage of preventive
services and the prohibition on annual or lifetime dollar limits.
IRS guidance has explained that in order to comply with ACA's market
reforms, an HRA must be "integrated" with a group health
plan that is ACA-compliant. While IRS rules allow an HRA to be
integrated with a group health plan not sponsored by the employer
sponsoring the HRA, IRS has confirmed that, in general, an HRA cannot
be integrated with an individual market plan.
2015-87. Notice 2015-87
covers the following ACA compliance issues presented by HRAs:
- HRAs that
cover only former employees or retirees need not be integrated
with a group health.
- A former
employee covered by an HRA is ineligible for premium tax credits
as long as funds remain available in the HRA.
HRAs may reimburse individual market insurance premiums and other
- Unless the
retiree-only exception applies, unused amounts in an HRA cannot
be used to reimburse premiums paid by former employees for
individual market coverage, even if the amounts were originally
earned when the HRA was properly integrated with a group health
credited to an HRA before 2014 may be used to reimburse medical
expenses pursuant to the terms in effect before 2014 without
violating ACA market reforms.
- An HRA that
reimburses medical expenses for an employee and the employee's
spouse and dependents cannot be integrated with self-only group
health plan coverage but must be integrated with coverage in
which the spouse and dependents are enrolled to comply with ACA
requirements. (Note: IRS will not enforce this rule
- An HRA that
reimburses an employee for premiums paid for individual market
coverage will not violate ACA market reforms if such coverage
only provides excepted benefits.
- An employer
payment plan or an HRA that is part of an Internal Revenue Code
Section 125 cafeteria plan must be integrated with a group
health plan in order to be ACA-compliant.
- An HRA must
be properly documented and be in operational compliance with ACA
Takeaway for Employers. As a result of the documentary compliance
requirement for HRAs provided in Notice 2015-87, employers must now
carefully review their HRA documentation to ensure that it satisfies
the ACA's market reforms. Employers that are considering
sponsoring HRAs should proceed with caution and consult with
qualified benefits advisors.
The IRS has extended the due dates (1) for
furnishing to individuals the 2015 Form 1095-B, Health Coverage,
and the 2015 Form 1095-C, Employer-Provided Health Insurance
Offer and Coverage, from February 1, 2016, to March 31, 2016,
and (2) for filing with IRS: Form 1094-B, Transmittal of Health
Coverage Information Returns; the 2015 Form 1095-B, Health
Coverage; the 2015 Form 1094-C, Transmittal of Employer-Provided
Health Insurance Offer and Coverage Information Returns; and the
2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage,
from February 29, 2016, to May 31, 2016, if not filing
electronically, and from March 31, 2016, to June 30, 2016, if filing
electronically. The IRS also provided guidance to individuals who do
not receive a Form 1095-B or Form 1095-C by the time they file their
2015 tax returns.