I remember talk on this forum last January about selling the defined contribution / HRA plans through Zane.(yes I just re-read the thread). Is the scenario discussed then still plausible Some seem to think these plans will boom now that they are on equal footing underwriting wise with group and it appears employers with less than 50 FE equivalents can send employees to the exchange and get Uncle Sam to pay part of the premium. There will be no penalty,the HRA is tax deductible and no underwriting. Seems like a no brainer for small employers struggling with high group premiums. I have groups on the books with as little as 5-10 employees paying hefty premiums. The employees only make $12-$15 per hour so they would definitely get at least some subsidy,maybe a large portion subsidized on the individual exchange. Seems to me We could sell this HRA product to these types of little groups who do not offer insurance and those which can drop their coverage and go the route I mentioned above. Does this make sense to take this approach with these very small employers? I think this could be a big market. Any thoughts?
Updates on Zane and Health Reform ?
- Thread starter Broker22
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Well I've been trying to get a concrete answer on this because I saw (and can't remember where) a CMS bulletin that says NO to what you're asking and it was dated in February, but I have asked this question with the company I represent and they're not sure but don't think so, so this is where I stand today. I hope this is cleared up in writing before Oct 1.
Bluediamond you are ahead of the curve, this is an excellent approach ti the small group market. Don't forget the small business tax incentives that will offer 35% this year and 50% by 2014 that still want to offer group. There will be a lot of options for small group in the coming months. The best way to leverage your relationship with Zane is the GroupHRA product, it's very easy to quantify a solution, and if you don't get the group business you can still establish the HRA, and get a foot in the door. At least you earn a commission on the admin fee even though it's low dollar stuff, still it gives you an opportunity for greater account penetration.
I think you need a new plan. See attached letter from Chamber of Commerce to HHS stating this HRA to buy IFP/exchange will be disallowed in 2014.
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So you have you heard or seen anything since or is this still an outright NO?
The best we can do is write our senators. Feel free to steal the following (formatting lost, don't know how to fix):
Senator Grassley,
I am writing on a matter concerning PPACA and the use of stand-alone HRA by small businesses to allow their employees to purchase individual health plans starting in 2014 as an alternative to the growing premiums of small group health policies for employers with fewer than 20 employees. Currently there is no official rule on this matter, but it would seem that HHS, DOL and the Department of the Treasury are inclined not to allow this according to the following:
Section 2711 of the PHS Act, as added by the Affordable Care Act, generally prohibits plans
and issuers from imposing lifetime or annual limits on the dollar value of essential health
benefits. . . . The preamble [to interim final regulations under Section 2711] stated that “[w]hen
HRAs are integrated with other coverage as part of a group health plan and the other coverage
alone would comply with the requirements of PHS Act section 2711, the fact that benefits
under the HRA by itself are limited does not violate PHS Act section 2711 because the
combined benefit satisfies the requirements.” (75 FR 37188, at 37190-37191). The corollary to
this statement is that 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.
Questions 2 through 4 below address certain issues relating to HRAs. The Departments
anticipate issuing future guidance addressing HRAs.
Q2: May an HRA used to purchase coverage on the individual market be considered
integrated with that individual market coverage and therefore satisfy the requirements of
PHS Act section 2711?
No. 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.
In order for small businesses in Iowa to compete for the talent that our local schools and universities produce, they need the ability to offer valuable benefits at affordable prices. Small group insurance policies are becoming more and more expensive leaving Iowa's small businesses at a disadvantage. I urge you to work with the departments listed above to structure rules that allow small businesses to offer robust benefits at affordable prices.
Tim Sipma
Sipma Health and Wealth
Sipma Health and Wealth | Sipma Health and Wealth
Senator Grassley,
I am writing on a matter concerning PPACA and the use of stand-alone HRA by small businesses to allow their employees to purchase individual health plans starting in 2014 as an alternative to the growing premiums of small group health policies for employers with fewer than 20 employees. Currently there is no official rule on this matter, but it would seem that HHS, DOL and the Department of the Treasury are inclined not to allow this according to the following:
Section 2711 of the PHS Act, as added by the Affordable Care Act, generally prohibits plans
and issuers from imposing lifetime or annual limits on the dollar value of essential health
benefits. . . . The preamble [to interim final regulations under Section 2711] stated that “[w]hen
HRAs are integrated with other coverage as part of a group health plan and the other coverage
alone would comply with the requirements of PHS Act section 2711, the fact that benefits
under the HRA by itself are limited does not violate PHS Act section 2711 because the
combined benefit satisfies the requirements.” (75 FR 37188, at 37190-37191). The corollary to
this statement is that 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.
Questions 2 through 4 below address certain issues relating to HRAs. The Departments
anticipate issuing future guidance addressing HRAs.
Q2: May an HRA used to purchase coverage on the individual market be considered
integrated with that individual market coverage and therefore satisfy the requirements of
PHS Act section 2711?
No. 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.
In order for small businesses in Iowa to compete for the talent that our local schools and universities produce, they need the ability to offer valuable benefits at affordable prices. Small group insurance policies are becoming more and more expensive leaving Iowa's small businesses at a disadvantage. I urge you to work with the departments listed above to structure rules that allow small businesses to offer robust benefits at affordable prices.
Tim Sipma
Sipma Health and Wealth
Sipma Health and Wealth | Sipma Health and Wealth
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Just an FYI, but in 2014 you only qualify for the credit if your group coverage is purchased through the SHOP exchange.
Yep,thats absolutely correct.
Like you, I want to be able to use this kind of vehicle to use tax-favored dollars to purchase individual health insurance. It seems like a win-win. But the consensus so far is a no.
HHS is planning to issue a final reg on this, and the consensus is that it will be negative. Most TPA's (third party administrators) that can do this type of HRA are saying that they will not do it due to information that came from HHS and IRS so far. NAHU says no. Someone asked an attorney and they said no, and also accountants we have polled have said no. The Chambers of Commerce letter that YAgents posted pretty much sums it up. Zane Benefits is touting it but most others are not. Even Health Partners American (HPA) that is led by Josh Hilgers is saying they will use HRA's, but not for subsidized business. That is because the current consensus is that it would be double dipping if you used a tax credit (subsidies) to pay for health insurance, then also used HRA pre-tax money. Add to that the fact that PPACA says that if a subsidy is provided, then the member's share of premium must come from the family themselves. (Using HRA funds is technically using employer funds.)
So, let's hope they rule soon, and let's hope it's a yes. But I have to say it looks like it will be a firm no.
HHS is planning to issue a final reg on this, and the consensus is that it will be negative. Most TPA's (third party administrators) that can do this type of HRA are saying that they will not do it due to information that came from HHS and IRS so far. NAHU says no. Someone asked an attorney and they said no, and also accountants we have polled have said no. The Chambers of Commerce letter that YAgents posted pretty much sums it up. Zane Benefits is touting it but most others are not. Even Health Partners American (HPA) that is led by Josh Hilgers is saying they will use HRA's, but not for subsidized business. That is because the current consensus is that it would be double dipping if you used a tax credit (subsidies) to pay for health insurance, then also used HRA pre-tax money. Add to that the fact that PPACA says that if a subsidy is provided, then the member's share of premium must come from the family themselves. (Using HRA funds is technically using employer funds.)
So, let's hope they rule soon, and let's hope it's a yes. But I have to say it looks like it will be a firm no.
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