I blogged recently about IRS and Department of Labor (DOL) guidance restricting the ability of employers to subsidize individual health insurance premiums for their employees after December 31, 2013. That IRS and DOL guidance also addressed a few other issues. The guidance provides that HRA amounts credited to an employee can be used to determine whether the underlying group health plan coverage meets minimum value standards or affordability standards, but not both. Employees are eligible for premium subsidies in the Marketplace if the coverage offered by their employer is not affordable or if it does not provide minimum value. Minimum value is based upon an actuarial calculation of the value of benefits expected to be provided under the plan. Affordability is based on the cost to the employee of the least expensive minimum value plan offered by the employer. If an HRA can be used to reimburse only coinsurance and deductible amounts, then the amount credited for the plan year under the HRA can be included in determining whether the coverage meets minimum value. If the HRA can be used only to help pay for premiums under the employer’s group health plan, then the amount credited that year will be viewed as subsidizing the premium payment for purposes of the affordability test. If it can be used for premiums, coinsurance, deductibles or other expenses, it will be considered under the affordability test and not the minimum value test.
The guidance also addressed employee assistance programs (EAPs). In some cases EAPs are also group health plans under ERISA, for example, if they offer mental health counseling sessions, rather than just referrals. Like guidance in other areas, this guidance concludes that if an EAP does not provide significant benefits in the nature of medical care or treatment, the EAP is considered an excepted benefit under health care reform and does not need to meet the requirements of no annual limit or first dollar preventive care coverage. Many EAPs are structured so as not to provide significant medical care or treatment. At least until the end of 2014, the guidance allows the employer to use a good faith interpretation in determining whether an EAP is an excepted benefit. An EAP that is an excepted benefit will not offer sufficient coverage to allow an employer to avoid the employer “pay or play” penalty (here, here and here), but also will not need to be meet all the health care reform requirements.
Employers with questions about their HRAs, EAPs and other ancillary benefits should check with their benefits attorney or advisor about the impact of this guidance on their programs.