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IRS publishes final rules on minimum value of eligible employer-sponsored health plans

Agency provides clarification on reimbursement arrangements

Posted December 22, 2015

In the December 18 Federal Register, the Internal Revenue Service (IRS) published final regulations on the health insurance premium tax credit. The regulations are effective immediately.

The final regulations affect individuals who enroll in qualified health plans through Affordable Insurance Exchanges (marketplaces) and claim the health insurance premium tax credit, and Exchanges that make qualified health plans available to individuals and employers.

After the publication of the proposed rule on May 3, 2013, the IRS received and evaluated comments from the public. The final rule implements clarification to several of the rules in response to the feedback.

In response to the comments regarding health reimbursement arrangements (HRAs), the regulations clarify that:

  • Amounts newly made available under an HRA reduce an employee's required contribution if the HRA would have been integrated with eligible employer-sponsored coverage had the employee enrolled in the primary plan.
  • An HRA is taken into account in determining affordability only if the HRA and the primary eligible employer-sponsored coverage are offered by the same employer.
  • HRA contributions are taken into account for affordability and not minimum value if an employee may use the HRA contributions to pay premiums for the primary plan only or to pay cost-sharing or benefits not covered by the primary plan in addition to premiums.
  • Employer contributions to an HRA reduce an employee's required contribution (or count towards providing minimum value for section 36B purposes) only to the extent the amount of the annual contribution is required under the terms of the plan or is otherwise determinable within a reasonable time before the employee must decide whether to enroll.

The final rule also addresses public comments on the following, but after consideration the agency has retained that which was issued in the proposed rule:

  • The definition of modified adjusted gross income;
  • Wellness programs incentives;
  • Employer contributions to cafeteria plans;
  • Post-employment coverage;
  • Newborns, adopted children, and other individuals enrolled midmonth; and
  • Partial months of coverage.

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