February 11, 2013

FAQs about Affordable Care Act Implementation: HRA

On January 24^th, 2013 new FAQs were released to help better understand some of the changes with health care reform.  Health and Human Services (HHS), Department of Labor (DOL) and the Treasury department were part of creating this document. 

One major question was the wording that said “integrated” HRA.  The FAQs defined an “integrated” HRA as an “HRA that is available only to employees who are covered by primary group health plan coverage provided by the employer and meeting the requirements of Public Health Service (PHS) Act section 2711.” This section of the PHS Act generally prohibits plans and issuers from imposing lifetime or annual limits on the dollar value of essential health benefits.

The information becomes effective January 1, 2014, as waivers currently in place will expire, subjecting HRAs to the annual and lifetime limit restrictions.  Standalone HRAs contain an annual limit and will no longer be a benefit allowed under the health care reform regulations. Employers will want to review their HRA eligibility requirements in order to ensure their HRA meets the integrated new definition for HRA before the January 1, 2014 deadline.  The HRA will need to be designed so that employees are eligible for the HRA only if they are enrolled in the employer’s group health coverage.  

These are more questions and responses from the document:

May an HRA used to purchase coverage on the individual market be considered integrated with that individual market coverage and therefore satisfy the requirements of PHS Act section 2711?

No. The Departments intend to issue guidance providing that for purposes of PHS Act section 2711, an employer-sponsored HRA cannot be integrated with individual market coverage or with an employer plan that provides coverage through individual policies and therefore will violate PHS Act section 2711.

If an employee is offered coverage that satisfies PHS Act section 2711 but does not enroll in that coverage, may an HRA provided to that employee be considered integrated with the coverage and therefore satisfy the requirements of PHS Act section 2711?

No. The Departments intend to issue guidance under PHS Act section 2711 providing that an employer-sponsored HRA may be treated as integrated with other coverage only if the employee receiving the HRA is actually enrolled in that coverage. Any HRA that credits additional amounts to an individual when the individual is not enrolled in primary coverage meeting the requirements of PHS Act section 2711 provided by the employer will fail to comply with PHS Act section 2711.

How will amounts that are credited or made available under HRAs under terms that were in effect prior to January 1, 2014, be treated?

The Departments anticipate that future guidance will provide that, whether or not an HRA is integrated with other group health plan coverage, unused amounts credited before January 1, 2014, consisting of amounts credited before January 1, 2013 and amounts that are credited in 2013 under the terms of an HRA as in effect on January 1, 2013 may be used after December 31, 2013 to reimburse medical expenses in accordance with those terms without causing the HRA to fail to comply with PHS Act section 2711. If the HRA terms in effect on January 1, 2013, did not prescribe a set amount or amounts to be credited during 2013 or the timing for crediting such amounts, then the amounts credited may not exceed those credited for 2012 and may not be credited at a faster rate than the rate that applied during 2012.

For more information about these and other questions, visit http://www.dol.gov/ebsa/faqs/faq-aca11.html

February 5, 2013

Peak1 Mobile App Continues to Grow in Popularity

Over the past few months we have noticed a substantial growth in the use and downloads of our Peak1 mobile app.  We have received great feedback about this app and users are starting to see how it can make things easier for them.

The app is available for both iPhone and Android and has proven to be a convenient way for users to check balances of their account based plans (HRA, HSA and FSA).  Participants can also check their claim history and even take a picture of their receipts for faster claim processing!  Here are more details about the app:

IT’S EASY AND CONVENIENT

Designed to work just as other apps, making it easy to learn and use

IT CONNECTS YOU WITH THE DETAILS

• Check available balances 24/7
• View account activity for your accounts
• Drill into claim transactions for your HRA and FSA accounts

 TAKE PICTURES OF CLAIM RECEIPTS

• View claims requiring receipts
• Take a picture of a receipt and submit for a claim

IT’S SECURE

No sensitive account information is ever stored on your mobile device and secure encryption is used to protect all transmissions

ADDITIONAL FEATURES

• Mobile File A Claim— Enables you to submit a new FSA or HRA claim from your Mobile app at any time, and to add a receipt at the same time a claim is being filed. 
• HSA Transaction Details—Enables you to drill into details of your HSA transactions. The specific HSA information displayed includes details of cash account activity, and participant and employer contributions. 
• Enhanced Login (Passcode) —Allows you to login to your Lighthouse1 Mobile App with a convenient 4-digit passcode.   For added security, no login information is ever stored on your mobile device. 

To download, please visit the following sites:

iPhone: Apple Store

Android: Google Play

January 31, 2013

IRS Imposes New Tax on HRAs

Summary

With the implementation of the Patient Protection and Affordable Care Act (PPACA), a new fee has been announced for sponsors and issuers of individual and group policies, called the Patient-Centered Outcomes Research Institute (PCORI) fee.  This fee was developed to support research on clinical effectiveness.  IRS Bulletin 2012-19 explains that this fee is to be paid by the issuer of fully insured group health plans (the insurer) and sponsors of applicable self-insured group health plans (the employer), including HRAs.

New Fees

An HRA is considered a self-insured plan, and as a result you are now responsible for paying the fee (through an excise tax) for all lives covered under your HRA. The first year of the fee is $1 per covered life per year, the second year fee adjusts to $2 per covered life per year and then it's indexed to national health expenditures until it terminates in 2019.

How the Fee is calculated

According to Section §4376 of the IRS Code, the fee is equal to the average number of covered lives for the policy year times the applicable dollar amount.

• For policy years ending on or after Oct. 1, 2012, and before Oct. 1, 2013 - the applicable dollar amount is $1.
• For policy years ending on or after Oct. 1, 2013, and before Oct. 1, 2014 - the applicable dollar amount is $2.
• For policy years ending in any fiscal year beginning on or after Oct. 1, 2014 - the applicable dollar amount is the prior fiscal year's dollar amount plus an adjustment for medical inflation (TBD).

How to Pay the Fee

Your annual HRA plan fee is to be paid by July 31st of the calendar year following the plan year end via IRS Form 720 Quarterly Federal Excise Tax Return. (The IRS plans to revise Form 720 to reflect these changes.)

Effective Date

The fee applies to policy/plan years ending on or after October 1, 2012. For a calendar year plan, the fee will first be applicable for the 2012 plan year.

More Information

For more information on IRS Bulletin 2012-19, visit http://www.irs.gov/pub/irs-irbs/irb12-19.pdf

January 14, 2013

Transit and Parking Benefits Get a Cost of Living Increase for 2013

On Friday, January 11, 2013, the Internal Revenue Service announced inflation adjustments for the 2013 tax year, which included items from the recently passed American Taxpayer Relief Act of 2012, which was signed into law last week. The provision to re-instate the parity of transit and parking benefits was included in the inflation adjustment. For 2013, the amount of pre-tax dollars that can be used to pay for Transit and/or Parking Benefits has increased to $245 per month.

Peak1 is making changes to the monthly maximums set in the debit card and Lighthouse1 administration platforms to accommodate the changes. The IRS monthly maximum reimbursement for parking and mass transit plans will be increased to $245 with an effective date of 01/01/2013. The monthly maximums for 2012 will not be changed. Any claims submitted for reimbursement with dates of service in 2012 will be subject to a $240 monthly maximum reimbursement. These changes will be in place on Monday, January 14, 2013.

Any claims entered after this change has been made in your database will be subject to the new monthly maximum. Please contact Peak1 if you have any additional questions.