QUESTION: Our company sponsors an HRA that is integrated with our fully insured major medical plan. Only employees who enroll in our insured major medical plan can participate in the HRA. Expenses of an employee’s spouse or tax dependent are also covered. We understand that the insurer is responsible for the information reporting required under Code § 6055 for our insured plan, but as plan sponsor, is our company required to separately report the HRA coverage?
ANSWER: In most cases, employers sponsoring HRAs do not have to separately report HRA coverage that is integrated with their major medical coverage (see our Checkpoint article regarding HRA integration). But as explained below, your company might have an HRA reporting obligation if your HRA reimburses expenses of employees’ spouses or tax dependents. As background, Code § 6055 requires any coverage provider who provides “minimum essential coverage” to an individual during a calendar year to report certain health coverage information to the IRS and furnish a written statement to the covered individual. The reporting—which is first required in 2016 for coverage provided in 2015—is intended to help individuals prove they were covered by minimum essential coverage and therefore not subject to the shared responsibility penalty for individuals. (Minimum essential coverage includes most employer-sponsored group health coverage, including integrated HRAs.)
HRA coverage does not have to be reported if the same coverage provider reports other minimum essential coverage for the individual. But that exception does not apply to your company because your insured coverage is treated as provided by the insurer, not by your company.
Another reporting exception applies when HRA coverage is available only to individuals who are covered by other minimum essential coverage sponsored by the same employer. This exception applies to your employees’ HRA coverage because only employees who enroll in your company’s major medical plan can participate in the HRA, and both plans have the same plan sponsor. This reporting exception will also apply to an employee’s spouse or tax dependents so long as coverage under your major medical plan is a condition of their HRA eligibility. If employees’ family members are not required to enroll in your major medical plan to obtain HRA coverage, it appears you must separately report their HRA coverage even if they in fact enroll in your major medical plan—but clarifying guidance from the IRS on this point would be welcome.
We note that it has been common for an employer-sponsored HRA to reimburse the medical expenses of employees’ spouses and tax dependents, even if they have not enrolled in the employer’s major medical coverage. Under IRS guidance issued in December 2015, however, the nonexcepted HRA coverage of spouses and dependents must be integrated with another group health plan in order to satisfy health care reform. A transition rule allows continued HRA coverage for family members without integrated non-HRA coverage for plan years beginning before 2017 if certain conditions are met (see our Checkpoint article). If your HRA does not already require integration with other group health coverage, you will need to begin preparing for that requirement.
Affected employers should review these issues with legal counsel and keep in mind that reporting requires efforts to obtain SSNs (or TINs) of covered individuals.
For more information, see EBIA’s Health Care Reform manual at Section XXXVI.C (“Information Reporting of Minimum Essential Coverage (Insurers and Employers that Self-Insure)”) and EBIA’s Consumer-Driven Health Care manual at Section XXV.G.5.f (“HRA Issues Raised by Certain Health Care Reforms That Are Not PHSA Mandates: Information Reporting”). See also EBIA’s Form 1094/1095 Workbook for Employers and Advisors at Section IV.B.3 (“Form 1095-B Report/Statement”).
Contributing Editors: EBIA Staff.