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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Five 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.



Contact Info

The Wagner Law Group


  Integrity | Excellence


Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418


San Francisco Office

Tel: (415) 625-0002

Fax: (415) 829-4385

315 Montgomery Street

Suite 902

San Francisco, CA 94104





May 9, 2013 

 State and Federal Law Alert


 IRS Explains How HSAs, HRAs and Wellness Programs Factor into Minimum Value and Affordability Calculations


The IRS has released proposed regulations explaining how health savings account ("HSA") contributions, health reimbursement arrangement ("HRA") credits and wellness program incentives factor into the determination of whether an employer's group health plan is "affordable" and provides "minimum value", as defined under the Patient Protection and Affordable Care Act ("PPACA").


Background. Under PPACA, large employers (i.e., employers with 50 or more employees) may be assessed a "pay-or-play" penalty if a full-time employee receives a health insurance credit through an Exchange. Employees who are eligible for coverage under an employer's group health plan can receive the credit only if the employer's coverage is either unaffordable or does not provide minimum value. Employer-sponsored coverage is unaffordable if the employee's portion of the premium exceeds 9.5% of household income. Coverage does not provide minimum value unless it pays 60% or more of the cost of essential health benefits.


Therefore, to avoid liability for the pay-or-play penalty, employers must ensure that their health coverage is affordable and provides minimum value. The proposed regulations explain how the following factor into the affordability and minimum value calculations:


HSA Contributions. Because HSA contributions cannot be used to pay health insurance premiums, they do not factor into the affordability analysis. However, current-year employer contributions to HSAs can be taken into account for purposes of demonstrating that a plan meets the minimum value threshold.


HRA Credits. Employer-provided HRA credits are taken into account to determine affordability if the HRA allows employees to use the credits to pay health plan premiums. If employees can use the HRA credits to pay premiums, the credits may only be used to satisfy the affordability requirement. Conversely, if employees can only use HRA credits to reimburse incurred medical expenses, the HRA credits may only be used toward satisfying the minimum value threshold.


Wellness Program Incentives. The proposed regulations distinguish between wellness programs designed to prevent or reduce tobacco use and all other wellness programs. For employer-sponsored wellness programs that relate to tobacco use, employers may assume that all employees will satisfy the wellness program's requirements and receive the program's incentive reward. Accordingly, if the tobacco cessation program provides a premium discount for non-tobacco users, the discounted premium may be included in the affordability analysis. Likewise, any cost-sharing reductions (e.g. lower deductibles, co-payments, or co-insurance) provided to non-tobacco users may be included in the minimum value analysis.


For employer-sponsored wellness programs that do not relate to tobacco use, employers must assume all employees will fail to meet the wellness program's requirements. Accordingly, any premium discount or cost-sharing reductions provided under the non-tobacco related wellness program must be disregarded for purposes of satisfying PPACA's affordability or minimum value requirements.


The proposed regulations provide a temporary exception to the above wellness program rules. For plan years beginning before January 1, 2015, employers can assume that all employees qualify for any incentive made available under a wellness program. Thus, for the 2014 plan year, all wellness program incentives, even those unrelated to tobacco use, may be included when determining affordability and minimum value.


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Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.


This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.