Last week on the Health Affairs Blog I read the post, Implementing Health Reform: Health Reimbursement Arrangements And More, and it pissed me off. As a healthy person with a healthy family I hoped the unintended consequences of the Affordable Care Act would not affect me. Here is the part that bothered me.
The FAQ clarifies that this approach is not possible under section 2711. The agencies intend to issue further guidance on the issue, but have concluded that stand-alone HRAs used to purchase individual coverage will not be considered to be integrated coverage that complies with the annual dollar limit requirement. Indeed, if employees are offered an HRA and group coverage, but decline the group coverage, the stand-alone HRA coverage will violate section 2711. The FAQ does permit amounts accumulated in a stand-alone HRA prior to January 1, 2014 to be drawn on after that point if certain conditions are met.
After I read the FAQ I realized that my days of benign neglect are over. I also read the Federal Register Section 2711. It appears that the Department of Labor opted to for an interpretation that makes HRAs illegal. FAQ #11 states that: "The Departments intend to issue guidance providing that for purposes of PHS Act section 2711, an employer-sponsored HRA cannot be integrated with individual market coverage or with an employer plan that provides coverage through individual policies and therefore will violate PHS Act section 2711." As a person who is presently using a HRA to pay for my health expenses I strongly disagree with their interpretation and have started the process of fighting their decision. My first step is to ask the Department of Labor for clarification on two questions. It should be interesting how far I will be willing to go with this issue.
Q#1. Can a firm with less than 50 employees continue to offer HRAs since these firms are specifically exempt from the regulations?
Q#2. I use my HRA to purchase health insurance in the individual insurance market. Although my health insurance is a grandfathered plan, my insurance company is making a good faith effort at complying with Section 2711. I discussed our future health care options at our small business and we have two options, a HRA or nothing. I think they would prefer nothing. Can you explain the logic why the Department of Labor prefers that I pay for my health insurance completely out of pocket versus my present arrangement with a HRA?
Let us be perfectly honest here. With this ruling it is obvious that I was much better off before the Affordable Care Act. Is this really a step forward in health care?