DOL Announces Flexibility on Timing of Required ICHRA Notice
Last Updated: September 11, 2020
On June 23, 2020, the Department of Labor (DOL) released “FAQs About Families First Coronavirus Response Act and Coronavirus Aid, Relief, and Economic Security Act Implementation Part 43” (the FAQs)[i]. In the FAQs, the DOL announced additional flexibility for employers offering an Individual Coverage HRA (ICHRA) regarding the timing of the required ICHRA notice to employees.
Background
The final expanded Health Reimbursement Arrangement (HRA) regulations, which allow HRAs to be used to pay for individual health insurance policies, require employers to provide a new notice to eligible individuals.The notice must include information such as a description of the terms of the HRA, the maximum dollar amount available, substantiation requirements for participation and reimbursements, the ability to opt out, information about premium tax credit (PTC) eligibility, and more. The notice must be provided at least 90 days before the beginning of each plan year, or, for those who become eligible later or enroll after the beginning of the plan year, no later than the individual’s effective date. A model notice provided by the agencies can be found here: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/Downloads/HRA-Model-Notice-PDF.pdf.
EBSA Disaster Relief Notice 2020-01
For the period of time beginning March 1, 2020, until 60 days after the National Emergency is over (or such other date as announced by the agencies), all group health plans, disability plans, other employee welfare benefit plans, and employee pension plans must disregard this time period (the “Outbreak Period”) when administering plans and allowing employees and other plan participants to exercise certain rights.
On April 28, 2020, the Employee Benefits Security Administration (EBSA), an agency of the DOL, provided a broad extension for all notices and disclosures required under ERISA (e.g. SPDs, SBCs, initial COBRA notice, SARs, WHCRA notice, etc.). Under this notice, plan sponsors will not be considered non-compliant during the Outbreak Period for failing to provide ERISA-required notices and disclosures within generally required time frames so long as plan sponsors act in good faith and furnish the notice or disclosure “as soon as administratively practicable under the circumstances”. Plan sponsors are permitted to use alternative electronic means of communicating such notices or disclosures including email, text messages, and continuous access websites, so long as the plan sponsor reasonably believes participants have effective access to electronic means of communication.
FAQs Part 43
The FAQ released by the DOL clarifies that EBSA Disaster Relief Notice 2020-01 also applies to the required ICHRA notice. The FAQs state that “an individual coverage HRA notice that would otherwise be required to be furnished between March 1, 2020, and 60 days after the announced end of the COVID-19 National Emergency, generally may be furnished as soon as administratively practicable under the circumstances.” For example, employers offering 2020 calendar year ICHRAs will not be penalized for failing to send out the required notice at least 90 days before the beginning of the plan year as long as the employer provides the notice as soon as administratively practicable under the circumstances.
Additional Considerations
The FAQs go on to provide details around two potential consequences of an employer delaying the required notice. Employers who offer an ICHRA and do not send the required notice at least 90 days before the beginning of the plan year should be aware of, and attempt to mitigate, these consequences to the best of their ability.
- “Individuals cannot receive reimbursement from their individual coverage HRA for medical care expenses that were incurred during a month when they were not enrolled in such coverage, and must forfeit their individual coverage HRA if they are not enrolled in such coverage. Employers should ensure notices are provided with sufficient time to allow individuals to weigh their coverage options and enroll in individual health insurance coverage.”
- “The offer or acceptance of an individual coverage HRA may have consequences for eligibility for the premium tax credit available to qualified individuals purchasing individual health insurance coverage offered through the Health Insurance Marketplaces. The individual coverage HRA notice includes important information to help employees understand this.”
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[i] https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-43.pdf