HHS Provides Temporary Relief for Stand-Alone HRAs

HHS Provides Temporary Relief for Stand-Alone HRAs

by Brian M. Pinheiro and Clifford J. Schoner

Continuing the furious pace with which it has been issuing health care reform guidance, the U.S. Department of Health and Human Services (HHS) has indicated that all health reimbursement accounts (HRAs) that were in effect before September 23, 2010, are exempt from the Patient Protection and Affordable Care Act's prohibition against annual limits for plan years beginning on or after September 23, 2010, and before January 1, 2014.

Because an HRA is an account-based group health plan that limits a participant's available reimbursement for a plan year to the value of his or her HRA account, it is virtually impossible for an HRA to comply with the annual limit prohibition.

Previously issued final regulations implementing the annual limit prohibition did not apply the prohibition to HRAs that were "integrated" with other group health plan coverage. Further, HRAs that are grandfathered or that provide only benefits to retirees or benefits excepted from the Act (e.g., limited-scope dental or vision plans) are not subject to the prohibition.

The remaining HRAs that had been subject to the annual limit prohibition are commonly referred to as "stand-alone" HRAs. Under the guidance provided by HHS, these HRAs now can continue being operated according to their terms through plan years beginning before January 1, 2014, provided they were in existence on or before September 23, 2010, even though the maximum reimbursement amount available to a participant for a plan year is limited to the value of a participant's HRA account.

If you have questions regarding the contents of this legal alert, please contact Brian M. Pinheiro at 215.864.8511 or pinheiro@ballardspahr.com, or Clifford J. Schoner at 215.864.8626 or schonerc@ballardspahr.com.

As the federal health care reform effort gained steam, Ballard Spahr attorneys formed an initiative to monitor and analyze legislative developments. With federal health care reform now a reality, our attorneys are assisting health care entities and employers in understanding the relevant changes and planning for the future. For more information on the firm's Health Care Reform Initiative, please click here.

Copyright © 2011 by Ballard Spahr LLP.
www.ballardspahr.com
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

People

Brian M. Pinheiro
Clifford J. Schoner

Related Practices

Employee Benefits and Executive Compensation

Health Care

Health Care Reform

For more information about LexisNexis products and solutions connect with us through our corporate site.