On December 16th, the Treasury Department and IRS released Notice 2015-87 regarding the treatment of employer health care arrangements and the market reforms of the Affordable Care Act. Below are a few highlights from the most recent Notice 2015-87:
1) The notice reaffirms that an HRA or employer payment plan with one participant can still reimburse individual market premiums without violating the market reforms.
2) The notice solidifies that an HRA or employer payment plan with two or more participants cannot pay or reimburse individual market premiums. These types of arrangements are subject to the $100 per-employee per-day penalty.
3) The notice amended previous guidance regarding Integrated HRAs. Prior to this notice, the benefit amount of the Integrated HRA could be extended to a spouse and dependent who were not insured by the employer’s group insured plan, but insured by another employer’s group insurance plan. From this point moving forward the Integrated HRA benefit amount can only be extended to individuals who are insured by the employer’s group insurance plan.
4) The notice reiterates that an employer who utilizes an Excepted Benefits HRA or 125 Plan for two or more participants does not violate the market reforms.
5) The notice further confirms that an employer cannot utilize a Section 125 plan to pretax individual market premiums, even if it is funded solely by the employee. These types of arrangements are subject to the $100 per-employee per-day penalty.
Many of the questions addressed elaborate on IRS Notice 2013-54, FAQs about the Affordable Care Act Implementation (Part XXII), Notice 2015-17, and final regulations implementing the market reform provisions of the ACA, which BASE® has already complied with, leaving our customers effectively untouched by this notice. While BASE® plans have been operating under this interpretation already, you may have customers who are not utilizing BASE®, either self-administering or using another administrator, and will want to consider completing a compliance assessment.
BASE® - Director of Marketing & Communications