Important Healthcare Reform Updates

IRS Regulation building

The  Department of Labor and the Internal Revenue Service have published notices (DOL Technical Release 2013-3 and IRS Notice 2013-54) that provide new guidance concerning the implementation of the Affordable Care Act and the associated changes to Cafeteria Plans, Flexible Spending Accounts and Health Reimbursement Arrangements for plans that start on or after January 1, 2014.

 

The following is an overview of the changes and our reading of how plans may be affected.  Please take a few minutes to review the information below. As always, we are happy to field any questions you may have, however,  we strongly recommend that you also review this information with your legal team, tax advisors or benefit advisors with regards to how you should proceed with your plan.

 

Health Flexible Spending AccountsFSAs can only be offered to employees who are eligible to participate in the company sponsored medical plan

Key elements of the notices:

What does this mean for my plan?

    • If you offer a group health plan and do not contribute to your employees’ FSAs, no changes will be needed for your plan to continue to be offered.
  • If you do not offer a group health plan to your employees or have an employer contribution for your FSA, please contact us immediately so we may review your options.

 

Individual Insurance ReimbursementPre-tax funds may not be used to reimburse or purchase individual health insurance policies

Key elements of the notices:

  • Reimbursement of individual insurance premiums will no longer be allowed on a pre-tax basis for plan years beginning on or after January 1, 2014.

What does this mean for my plan?

  • If you offer reimbursement of any individual premiums on a pretax basis, whether it is through a cafeteria plan, HRA, or through an internal process, you will need to amend your plan design to no longer offer this feature. If we administer your plan, please contact us regarding this specific component of your benefit plan.

 

Health Reimbursement Arrangements (HRAs)HRAs can be offered only to employees who are enrolled in medical coverage

Key elements of the notices:

 

  • Standalone HRA plans are not an option. Notice 2013-54 confirmed that HRA plans beginning in 2014 –   must be integrated with a group health plan, meaning the employees covered by the HRA plan are also covered by a group health plan.

A few things to consider:

In order to meet the requirements of the ACA and the current guidance an HRA is considered Integrated with a medical plan when:

  • An employee is enrolled in a medical plan.
  • The medical plan must provide minimum value or if it doesn’t meet minimum value is limited to reimbursement of specific items.
  • Employee must have an option to waive HRA contributions.

What does this mean for my plan?

    • Limited Purpose HRAs such as dental or vision plans can still exist and are not impacted by this guidance
    • If you offer an HRA plan and do not require participants to be on your group health plan, please contact us immediately so we can review your options.
  • If you offer an HRA plan and do not have a group health plan, please contact us immediately so we can review your options.

 

There are many changes coming for benefit plans in 2014.  We will continue to provide updates on any additional guidance that might be issued regarding the regulations.

Resource Center

DOL Technical Release 2013-3

IRS Notice 2013-54

 

BusinessPlans, Inc. – myCafeteriaPlan does not intend to provide legal or tax advice and information contained in this article should not be interpreted as such. Regulations governing pretax plans are often open to interpretation and should be reviewed with your legal or tax advisor before making any decisions regarding your plan.

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