Plans may not impose any annual dollar limits on essential health benefits for plan years beginning on or after January 1, 2014.
Note: The restrictions on annual limits only apply to certain types of health plans, such as major medical insurance. They do not apply to HIPAA excepted benefits, such as disability, cancer, hospital indemnity, or accident insurance. Click here for more information about the types of benefits that are exempt from the ACA plan design mandates.
FAQs published by the Federal agencies on January 24, 2013 clarified that employer sponsored Health Reimbursement Arrangements (HRAs) that are offered on a “stand alone” basis (i.e., not in connection with other health coverage) must comply with the ACA prohibition on annual or lifetime dollar limits on coverage. Because, by definition, an HRA limits the amount of benefits a participant may receive based on the amount of credits the employer makes available, an HRA alone cannot comply with the requirement to offer unlimited coverage.
When an HRA is integrated with other group health plan coverage, as long as the two together provide unlimited coverage, the fact that benefits under the HRA by itself are limited does not violate the law. The FAQs also provide that, if the employer offers both an HRA and health coverage but the employee fails to enroll in the employer’s coverage, the HRA will fail to comply with the law unless the plan allows the participant to prove coverage under another group health plan that provides unlimited coverage. (This would also prohibit an arrangement where the employer provides HRA credits to individuals who opt out of major medical coverage without proof of other compliant group health plan coverage.) Finally, the FAQs clarified that a standalone HRA used to purchase individual market coverage does not comply with the rule prohibiting annual or lifetime limits even if the purchased individual coverage does comply with the rule.
From a practical standpoint, this means that stand alone HRAs are no longer allowed for active employees without proof of other compliant group health plan coverage. Further guidance clarifies that, whether or not offered on a standalone basis, unused amounts credited before January 1, 2014 under the terms of an HRA in effect on January 1, 2013 may continue to be used by participants. Retiree only HRAs (with fewer than two current employees) are exempt from the ACA plan design mandates so are still allowed on a standalone basis.
Answer: Generally yes. For example, a plan may limit physical therapy coverage to a certain number of treatment sessions per illness or injury. However, a plan that limits coverage to a certain number of events (such as treatment sessions) and to a certain dollar limit per event (such as $100 per treatment session) probably would be considered to include an annual limit.
Neither American Fidelity Assurance Company nor American Fidelity Administrative Services provides tax or legal advice and, given the complexity of these laws, we always recommend working with your legal counsel on how the laws impact your specific situation.
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