Limited Exceptions to Reporting HRAs for ALEs
On December 22, 2016, the IRS revised its FAQs on Form 1094-C and Form 1095-C reporting. The FAQs generally track the final regulations, but provide some additional detail on reporting minimum essential coverage (MEC) and Health Reimbursement Accounts (“HRAs”) under the ACA. An HRA is a form of MEC and enrollment in an HRA must be reported, unless an exception applies. For fully-insured group health care plans, employers are generally not required to report enrollment in an HRA that is only available for employees enrolled in the health plan. For self-insured arrangements, a similar exception exists if an employee is covered by two or more arrangements that are considered MEC. Generally, if you have employees covered by your self-insured group health plan and HRA, then you’re not required to report their enrollment in the HRA on Form 1095-C, Part III. For example, if you have an employee who is enrolled in your self-insured group health plan and HRA through November, but then drops coverage under the health plan for December, you should report coverage under the health plan through November and report coverage in the HRA for the month of December.
These exceptions come with some important caveats. Importantly, these exceptions are limited to coverage provided under MEC offered by the same reporting entity. For example, you must report on an employee enrolled in your HRA if that employee is enrolled in their spouse’s group health plan offered by another employer (or any other group health plan not sponsored by you).
Further, you must report HRA coverage for any of your employees’ spouses and/or dependents for the months that those individuals are not enrolled in your group health plan. For example, for an employee who enrolls in self-only coverage under your group health plan, but enrolls his entire family in your HRA, you must report enrollment in the HRA for his family members. Remember that not all types of benefits qualify as MEC. For example, stand-alone excepted benefits such as dental, visions, disability, and workers’ compensation insurance are not MEC. Therefore, you must report enrollment in an HRA, even for employees that are also enrolled in an excepted benefit plan.
If questions or concerns remain after reviewing the IRS website, please contact us for help in navigating the reporting process for tax year 2016.