On August 19, 2011, the Center for Consumer Information & Insurance Oversight (CCIIO) released guidance regarding application of the existing annual limit waiver criteria – required by health care reform – to Health Reimbursement Arrangements (HRAs). The guidance exempts HRAs from having to apply individually for waivers from the restrictions on annual limits applicable to plan years beginning before January 1, 2014.
Health care reform generally prohibits group health plans (including HRAs) and health insurance issuers offering group or individual health insurance coverage from imposing lifetime or annual limits on the dollar value of essential health benefits, but allows restricted annual limits with respect to essential health benefits for plan years beginning before January 1, 2014. By their very nature, HRAs impose annual dollar limits because HRAs are structured to reimburse up to the dollar amount in a participant’s account. Such limits would always be less than the applicable restricted annual limit amounts. Thus, because applying the restrictions on annual limits to HRAs would result in a decrease in access to HRA benefits, HRAs in effect prior to September 23, 2010 do not have to apply for an annual limit waiver for plan years beginning on or after September 20, 2010, but before January 1, 2014.
Certain HRAs are exempt from the annual limit restrictions entirely, such as retiree HRAs, dental and vision HRAs, and HRAs integrated with a group health plan that is subject to annual limit rules, among others.
The recent CCIIO guidance offered some interim relief, but questions remain. For example, will HRAs still be subject to the annual limit rules after 2014? Do the annual limit rules apply to HRAs in effect after September 23, 2010, but before January 1, 2014? If so, can those HRAs still apply for a waiver from the annual limit rules? We hope to receive more detailed guidance in the future