March 1, 2013 Deadline to Notify Employees about Exchanges Postponed; HRA Guidance Provided
The Department of Labor (DOL) announced yesterday (in a new set of FAQs, which may be found at http://www.dol.gov/ebsa/faqs/faq-aca11.html) that the March 1, 2013 deadline to notify employees about Exchanges is delayed until later in the year. The notice will be aligned with the open enrollment for the Exchanges. The DOL will be providing additional information and most likely model notice language. Additionally, DOL stated that notice to the employees should be coordinated with the educational efforts of HHS and guidance from the IRS on minimum value. The DOL expects that the timing for distribution of the notices will be late summer or fall of 2013.
Action to Take: None. Employers are advised to wait for future guidance from DOL prior to drafting their Exchange notices.
In addition, the new FAQs provided additional guidance related to Health Reimbursement Accounts (HRAs). The Q&As clarified that an HRA must be integrated with another health plan in order to satisfy the requirements of an unlimited lifetime maximum or annual limits. Perhaps more importantly, the guidance suggests that an HRA only plan (which is a defined contribution approach) will not be in compliance even if the HRA monies are used to buy a plan on the Exchange. The FAQs appear to leave open the possibility that an HRA plan will only be in compliance if the participant can buy an employer sponsored Plan that is otherwise in compliance.
Comment: This set of guidance appears to potentially derail a number of strategies being explored using HRAs as the defined contribution vehicle to fund Exchange options.
Action to Take: Those considering such HRA defined contribution strategies should perform additional analysis to interpret the intention and impact on each plan.
Cheiron health consultants can assist you with consideration of the new set of FAQs and other aspects of the ACA.
Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Therefore, we do not provide legal services or tax advice.