By Danielle Capilla
Chief Com­pli­ance Offi­cer at Unit­ed Ben­e­fit Advisors

HRAContributionsThe Inter­nal Rev­enue Ser­vice (IRS) recent­ly issued a final rule that clar­i­fies var­i­ous top­ics relat­ing to the Patient Pro­tec­tion and Afford­able Care Act (ACA) and pre­mi­um tax cred­it eli­gi­bil­i­ty pro­vi­sions. Mir­ror­ing guid­ance from IRS Notice 2015–87, the final rule clar­i­fies that health reim­burse­ment arrange­ment (HRA) con­tri­bu­tions by an employ­er that may be used to pay pre­mi­ums for an eli­gi­ble employ­er spon­sored plan are count­ed toward the employ­ee’s required con­tri­bu­tion, sub­se­quent­ly reduc­ing the amount required for their contribution.

Sim­i­lar­ly, an employ­er’s flex con­tri­bu­tions to a cafe­te­ria plan can reduce the amount of the employ­ee por­tion of the pre­mi­um so long as the employ­ee may not opt to receive the amount as a tax­able ben­e­fit, the flex cred­it may be used to pay for the min­i­mum essen­tial cov­er­age (MEC), and the employ­ee may use the amount only to pay for med­ical care. If the flex con­tri­bu­tion can be used to pay for non-health care ben­e­fits (such as depen­dent care), it could not be used to reduce the amount of the employ­ee pre­mi­um for afford­abil­i­ty pur­pos­es. Fur­ther­more, if an employ­ee is pro­vid­ed with a flex con­tri­bu­tion that may be used for health expens­es, but may be used for non-health ben­e­fits, and is designed so an employ­ee who elects the employ­er health plan must forego any of the flex plan’s non-health ben­e­fits, those flex ben­e­fits may not be used to reduce the employ­ee’s pre­mi­um for afford­abil­i­ty purposes.

Down­load UBA’s ACA Advi­sor for an expla­na­tion of min­i­mum val­ue rules relat­ed to child income, well­ness incen­tives, con­tin­u­a­tion cov­er­age, and mid-month enrollment.

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