The IRS (Internal Revenue Service) has offered technical guidance on the application of the market reform provisions of the ACA (Affordable Care Act) to health care arrangements like HRAs (Health Reimbursement Arrangements and FSAs (Flexible Spending Accounts).

This IRS document, Notice 2013-54 offers guidance on applying the market reform provisions, with many other provisions, of the new health care reform law to HRAs and FSAs and other payment plans that relate to health insurance coverage. The notice offers guidance related to Section 125 of the IRS tax Code and EAP programs.

Review some of the guidance on HRAs below:

1. Application of the market reform provisions to HRAs and Certain other Employer Healthcare Arrangements

Question 1: The HRA FAQs provide that an employer-sponsored HRA cannot be integrated with individual market coverage, and, therefore, an HRA used to purchase coverage on the individual market will fail to comply with the annual dollar limit prohibition. May other types of group health plans used to purchase coverage on the individual market be integrated with that individual market coverage for purposes of the annual dollar limit prohibition?

Answer 1: No. A group health plan, including an HRA, used to purchase coverage on the individual market is not integrated with that individual market coverage for purposes of the annual dollar limit prohibition. For example, a group health plan, such as an employer payment plan, that reimburses employees for an employee’s substantiated individual insurance policy premiums must satisfy the market reforms for group health plans. However the employer payment plan will fail to comply with the annual dollar limit prohibition because (1) an employer payment play is considered to impose an annual limit up to the cost of the individual market coverage purchased through the arrangement, and (2) an employer payment plan cannot be integrated with any individual health insurance policy purchases under the arrangement.

Question 2: How to the preventive services requirements apply to an HRA that is integrated with a group health plan?

Answer 2: Similar to the analysis of the annual dollar limit prohibition, an HRA that is integrated with a group health plan will comply with the preventive services requirements if the group health plan with which the HRA is integrated complies with the preventive services requirements.

Read More about Notice 2013-54.