Excepted Benefit HRA

Background

An excepted benefit HRA (EBHRA) is a new category of excepted benefits under HIPAA that is not subject to HIPAA portability or the ACA rules on lifetime and annual limits and preventive care; consequently, they are not subject to the HRA integration rules.

The EBHRA is unique because it is itself an excepted benefit; it reimburses for a broad range of medical expenses and would be considered a standard HRA subject to integration concerns but for the fact that it meets several specific requirements. It should not be confused with an HRA that only pays for other excepted benefits but is not itself an excepted benefit.

Qualification Requirements

To qualify as an EBHRA, the plan must meet the following requirements:

Other Coverage

Other group health plan coverage (that is not limited to excepted benefits and that is not an HRA or other account-based group health plan) must be made available to the participant by the same plan sponsor for the plan year. In addition, the EBHRA cannot be offered to any employee who is not eligible for the other group health plan coverage.Note that participants in the EBHRA cannot also be offered an ICHRA.

• While other group coverage must be offered, a participant does not have to actually enroll in that coverage.

Annual Benefit Amount

Amounts made newly available each year may not exceed the amount established by the IRS,$1,800 for plan years 2020 and 2021 indexed for inflation.

• This amount does not include any carryover from a previous year.
• Any amounts credited to another HRA or other account-based plan for the plan year counts against this total, unless the other plans only provide excepted benefits.

Reimbursable Expenses

Eligible expenses that can be reimbursed from an EBHRA include Section 213(d) medical care expenses, EXCEPT:

• Premiums for group or individual health care coverage or Medicare.

However, the EBHRA may be used to pay:

• COBRA premiums;
• Coverage that consists solely of excepted benefits; and
• Premiums for short-term, limited-duration insurance.

Reimbursable expenses can be limited to any one expense or set of expenses and plan documents should reflect what expenses are reimbursable.

Eligibility

The EBHRA must follow HIPAA nondiscrimination rules regarding its availability to all similarly situated individuals. In addition, coverage must be made available without regard for any health factor.

• Note that employees who choose one benefits package may be considered as a group of similarly situated individuals separate from those who choose another benefits package.

EBHRA Health Plan Requirements

ERISA

An EBHRA is a group health plan and will be subject to ERISA to the extent the sponsoring employer is not exempt from ERISA. Accordingly, all the rules generally applicable to ERISA plans will apply to an EBHRA, including:

• Providing a Summary Plan Description (SPD) and other ERISA notices;
• Following ERISA claim procedures; and
• Filing a Form 5500 (if required).

HIPAA

EBHRAs are subject to HIPAA’s privacy and security rules. Note that these requirements apply regardless of whether a plan is subject to ERISA.