Stand-alone HRAs exempted from annual minimum dollar limits
The Department of Health and Human Services has issued new guidance stating that plan sponsors of all stand-alone Health Reimbursement Arrangements (HRAs) with rollover of unused funds in effect prior to September 23, 2010 will no longer be required to seek waivers from federal rules that restrict annual dollar limits on coverage of essential benefits.
Due to this new exemption, plan sponsors won’t have to apply for waivers from the annual minimum dollar limit of $750,000 in 2011, $1.25 million in 2012 and $2 million in 2013. As a result, large group plan sponsors will be able to continue to provide significant HRA benefits to their participants.
The good news is that through 2013 you can have a stand-alone HRA. The bad news is you can’t after 2013.
The latest guidance builds on an earlier notice in which HHS said that HRAs that are integrated with group plans would be exempt from the annual limit requirements as long as the plan to which it was linked met the annual limit requirements.
Truth be told, stand-alone HRAs are relatively unusual. They have, though, been used by employers to meet requirements set by a San Francisco law that requires employers to spend a minimum amount of money on health care coverage for employees in the city.
HRAs also have been used by employers to help retirees pay for health care coverage, though federal regulators made it clear earlier that annual limit requirements do not apply to retiree-only plans. As a result, stand-alone HRAs for retiree-only plans are not affected by the annual limit requirements.