Continuing the discussion of my previous blogs on FAQs Part 35, one topic covered in these FAQs is a discussion of the new Qualified Small Employer Health Reimbursement Arrangements. Here is what the FAQs say on this topic:
Background and Prior Guidance. On September 13, 2013, the U.S. Department of Labor (the “DOL”) published Technical Release 2013-03 addressing the application of the Affordable Care Act market reforms to health reimbursement arrangements (“HRAs”) and employer payment plans (“EPPs”). The Treasury Department and the Internal Revenue Service (the “IRS”) contemporaneously published parallel guidance in Notice 2013-54. The U.S. Department of Health and Human Services (the “HHS”) issued guidance stating that it concurred in the application of the laws under its jurisdiction as set forth in the guidance issued by DOL, Treasury, and IRS (the DOL, Treasury, IRS and HHS being referred to below as the “Departments”). Subsequent guidance reiterated and clarified the application of the market reforms to HRAs and EPPs.
EPPs and HRAs typically consist of an arrangement under which an employer reimburses medical expenses (whether in the form of direct payments or reimbursements for premiums or other medical costs) up to a certain amount. As explained in Technical Release 2013-03 and Notice 2013-54, EPPs and HRAs are group health plans that are subject to the group market reform provisions of the Affordable Care Act, including the prohibition on annual dollar limits under PHS Act section 2711 and the requirement to provide certain preventive services without cost sharing under PHS Act section 2713. The 2013 guidance generally provides that EPPs and HRAs will fail to comply with these group market reform requirements because these arrangements, by their definitions, reimburse or pay medical expenses on the employee’s behalf only up to a certain dollar amount each year.