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Covered California Q&A

Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


Does ACA End HRAs with Individual Plans?

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Question: Will this new Technical Release stop me from offering employers with less than 50 employees a reimbursement plan for their employees to buy subsidized coverage in the exchange?

Answer: Yes. To quote the DOL Technical Release #2013-03, “…an employer-sponsored HRA cannot be integrated with individual market coverage or with individual policies provided under an employer payment plan, and, therefore, an HRA used to purchase coverage on the individual market under these arrangements will fail to comply with the annual dollar limit prohibition…”. HRA’s integrated with fully insured small are still in compliance.

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The logical alternative, perhaps an even better one, is to offer the employer/employees an HSA plan and HSA-compatible QHP. The benevolent employer could contribute to each employee’s HSA. There would probably be some cost savings for all concerned as far as premiums go. It’s the actual out-of-pocket expenses that could change.

If the employees are generally “younger and healthier” everyone might be more pleased with the outcome. And those HSA dollars can increase over the years together with a modest tax-deferred interest increase.

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