IRS and Treasury Release Proposed Regulations to Assist in Implementation of Individual Coverage HRA

IRS and Treasury Release Proposed Regulations to Assist in Implementation of Individual Coverage HRA

Friday, September 27, 2019  

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Posted by: Staff



On June 14, 2019, The Departments of Labor, Health and Human and Services and Treasury (the “Agencies”) issued final regulations which, among other issues, permitted employers to establish a stand-alone health reimbursement arrangement (“HRA”) by allowing the integration of HRAs with individual health insurance coverage, subject to certain conditions.  The final integration regulations apply for plan years beginning on or after January 1, 2020.  However, the final regulations promulgated by the Agencies did not address various issues on how an HRA integrated with individual health insurance would comply with other provisions of the Affordable Care Act (the “ACA”}.  Today, the Internal Revenue Service and the Department of the Treasury released  proposed regulations which address a number of these issues.

The proposed regulation addresses the following issues:

• Premium Tax Credit.    The proposed regulations address how to determine whether an employee that is covered by an HRA integrated with individual health coverage is eligible for a premium tax credit added under the ACA.
• Employer Shared Responsibility Payments.  The proposed regulations provide how to determine whether a large employer that offers an HRA integrated with individual health coverage would be subject to the employer shared responsibility payments.
• Nondiscrimination Rules.  The proposed regulations explain how the nondiscrimination requirements under Section 105 of the Internal Revenue Code apply to an HRA integrated with individual health coverage.

The IRS and Treasury are asking for comments on these proposed regulations within 90 days after the publication of these proposed regulations.  ECFC intends to provide comments after a more thorough review of the regulations.  A more detailed examination of these  proposed regulations will be included in the next Flex Reporter.