What is the Reporting Obligation for Employers with HRAs?
There is a lot of confusion as to whether an employer with a Health Reimbursement Arrangement (“HRA”) must report the employees participating in the HRA on Form 1095. Part of the confusion stems from the fact that the IRS keeps changing its mind.
In the final draft of the 2015 Instructions for Forms 1094-B and 1095-B , the IRS clarified that employers that sponsor fully-insured medical plans and HRAs do not have to report the enrollment of their employees in the HRA as long as the employee is also enrolled in the employer’s fully-insured major medical plan. The insurance company will be handling the reporting of who is enrolled for these individuals. This relief is new and welcomed by employers who offer an HRA with its fully-insured medical plan. Similarly, employers with self-funded medical plans and HRAs only have to report coverage under one and not both of the plans.
However, for both fully-insured and self-insured medical plans, the employer is required to report anyone who is covered by the HRA and not enrolled in the employer’s major medical plan (e.g., an employee who may participate in the employer’s HRA and be enrolled in the medical plan sponsored by his spouse’s employer). Further, employers that have 50 or more full-time equivalent employees must still report for each of its full-time employees whether or not the employee was offered coverage each month. This obligation is never shifted to the insurer even for fully-insured plans.