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CCIIO Exempts HRAs from Annual Limit Rules

Monday August 22nd 2011

On August 19, 2011, the Center for Consumer Information & Insurance Oversight (CCIIO) issued guidance (CCIIO 2011 – 1E) that exempts Health Reimbursement Arrangements (HRAs) from the restrictions on annual limits under the Affordable Care Act (ACA).

Recall that §2711 of the Public Health Service Act (PHSA) allows restricted annual limits on essential health benefits for group health plan coverage until plan years starting on or after January 1, 2014, when annual limits are prohibited. Prior regulations offered the following HRA guidance:

  • HRAs that were integrated with group health coverage were exempt as long as the other coverage complied with the restricted annual limits
  • CCIIO sought comment on how to treat stand-alone HRAs, but significantly, one provision in the Regulations exempted all arrangements under §106(c)(2), which includes almost all HRAs
  • Group health plans, including HRAs, could apply for a waiver from the requirements

This guidance “exempts as a class all HRAs that are subject to the requirements of section 2711 and that were in effect prior to September 23, 2010.” However, HRAs still must comply with the record retention and annual notice requirements contained in the Technical Instructions.

This is welcome news. CCIIO recognized that “applying the restrictions on annual limits set forth in section 2711 and the IFR to HRAs would result in a significant decrease in access to HRA benefits.” The current CCIIO list shows that 491 waivers were granted for HRAs (of a total 1,578 waivers). These HRAs will not have to apply for annual renewal of the waiver.

The guidance does leave some questions unanswered:

  • Do HRAs that took effect after September 23, 2010, also enjoy the exemption?
  • What happens in 2014? Will HRAs still have an exemption?

What’s your reaction? If you applied for an HRA waiver, what was your experience? Does this special exception make HRAs a more viable alternative to traditional health care offerings? Please comment below.

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