New ACA Guidance on HRA’s, FSA’s, and Cafeteria Plans

On Sept. 13, the Internal Revenue Service (IRS) and the Department of Labor (DOL) issued guidance on how certain Affordable Care Act (ACA) rules apply to health reimbursement arrangements (HRAs), health flexible spending accounts (FSAs) and cafeteria plans.

Under the new guidance, a group health plan, including an HRA, used to purchase coverage on the individual market cannot be integrated with that individual market coverage for purposes of the ACA’s annual dollar limit or preventive services requirements. This means that an HRA will need to be integrated with another group health plan to satisfy these rules.

Health FSAs must be offered through a cafeteria plan to be exempt from the annual limit prohibition. Also, health FSAs must qualify as “excepted benefits” to meet the preventive services requirements.

Finally, beginning in 2014, premiums for individual coverage through an Exchange cannot be reimbursed or paid for under a cafeteria plan.

For cafeteria plans that do not operate on a calendar-year plan year (as of Sept. 13, 2013), this restriction will apply beginning with the 2014 plan year. However, individuals may not claim a premium tax credit for any month in which they are covered by an individual plan purchased through an Exchange as a benefit under a cafeteria plan.

The guidance applies for plan years beginning on or after Jan. 1, 2014, but can be applied for all prior periods. For additional information, please consult the following resources:

 

Dana Rostro is the Director of Employee Benefits Sales and Operations at Texas Associates Insurors.

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