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Reimbursement Update re HRA Integrated with EE Only Coverage

Jun 08, 2016

May 16, 2016

To help ensure compliance with TASC HRA (formerly DirectPay), it’s important that you’re aware of a recent IRS Notice and how it may impact your Clients’ plans. Specifically, per Notice 2015-87 (Q&A-4), an HRA that is integrated with employee-only coverage cannot be used to reimburse expenses incurred by an employee’s spouse and/or dependents.

Guidance provided under Notice 2015-87 applies immediately to plan years that were implemented after December 16, 2015.  However, employers who had their HRA in place prior to December 16, 2015 have until the first day of the plan year beginning on or after January 1, 2017 to amend their HRAs. An email was sent on May 11 to affected TASC HRA (does not apply to AgriPlanNOW and BizPlanNOW) Clients (and their Providers received a one-up notification).

To elaborate, if not enrolled in group health plan coverage, the spouse and/or dependent coverage under the HRA does not qualify as “integrated coverage” under the health plan. As such, medical expenses incurred by the spouse and/or dependents are not eligible for HRA reimbursement. In summary, only individuals who are covered under the group health plan are covered under the HRA.

All plan years beginning on or after January 1, 2016 must comply immediately. What does this mean for your Clients’ TASC HRA? To comply, we have amended the Plan particulars. Clients must review and sign the HRA Plan Document and SPD Amendment for Spouse and Dependent Eligibility. Besides retaining this documentation with other Plan information, they must provide employees a copy and instruct that they retain it with the Summary Plan Description (SPD).

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