Consumer Directed Healthcare

Questions and Clicks

PRA and Exchanges: Individual coverage on the Exchange and its impact on pre-tax premiums

Question: Can participants who purchase individual coverage through the Exchange run their un-subsidized portion of the premiums pre-tax through a cafeteria plan?

Commentary: No, Code 125 does not allow pre-tax premiums for coverage purchased by employees through the Exchange. Health plans offered through an Exchange are not a qualified benefit in a cafeteria plan.


Debit Cards and Receipts: IRS substantiation guidelines for flexible spending debit cards

Question: My clients are receiving receipt requests on the medical items that they use their flexible spending debit cards to purchase. Does the IRS require the receipts and documentation or does the TPA set the receipt request level?

Commentary: The IRS has allowed debit cards for flexible spending purchases as a convenience to the participants. The IRS has set the receipt request guidelines for the TPA’s to follow to ensure that the debit cards are used properly for eligible medical expenses as defined in section 213d.


Qualifying Events: Exchange coverage impact on cafeteria plan qualifying events

Question: Will adding or losing coverage under an Exchange plan be considered a qualifying event under the cafeteria plan rules?

Commentary: No, it’s not permitted.


HRA Integrated Plans: Guidelines for “Integrated” HRA plans

Question: What are “integrated” HRA plans?

Commentary: An HRA is not considered integrated with primary health coverage offered by the employer unless, under the terms of the HRA, the HRA is available only to employees who are covered by primary group health plan coverage provided by the employer and meeting the requirements of PHS Act Section 2711.


HRA Stand-Alone Plans: Exemptions for Stand-Alone HRA plans

Question: Are there any exemptions for a Stand-Alone HRA plan to be eligible after January 1, 2014.
Commentary: There is a small exemption for plans that are not subject to HIPAA Portability and an additional exemption in the interim final regulations for plans that are flexible spending arrangements (FSAs) under code section 106 (c)(2).

The following HRA plans and/or Cafeteria plans with a HCFSA feature are not subject to HIPAA Portability:

  • Plans that have less than two participants who are current employees as of the first day of the plan year;
  • Plans that provide coverage (reimbursements) for benefits that are limited to dental, vision and long-term care benefits that are not an integral part of a group health plan; or
  • The employer offers other group health plan coverage (that is not just dental, vision or long term care coverage) and the maximum benefit payable to a participant under the HRA or Cafeteria Health Care Reimbursement Account plan is less or equal to the greater of:
  • $500 (plus any participant contribution, if applicable) or
  • two times the participant's salary reduction election for the year.

For the FSA exemption, Code section 106(c)(2) has two requirements that are in addition to the rules already applicable to the HRAs:

  • The HRA may not reimburse qualified long-term care services; and
  • The maximum amount of reimbursement which is reasonably available to a participant for such coverage must be less than 500 percent of the value of such coverage.