New IRS guidance on Obamacare dollar limit, preventive service rules

Still have questions about how the Obamacare’s annual dollar limit prohibition and preventative service requirements will affect your company? You’re not alone. Luckily, the IRS has come out with some additional help.

The IRS recently released Notice 2013-54 ahead of schedule. The notice is meant to provide guidance on market reform provisions of Obamacare, specifically provisions on annual dollar limit prohibition and preventative service requirements.

Annual dollar limit prohibition refers to the provision blocking insurance policies from limiting the amount per year that can be spent on essential healthcare needs. Preventative service requirements provide certain preventative care services, like blood pressure screenings or cholesterol tests, at no cost to the policy holder.

If your company’s healthcare benefits include any of the following arrangements, it’s worth taking a look:

• Health reimbursement arrangements (HRA)
• Employer payment plans, and
• Health flexible spending arrangements (FSA).

Questions and Answers

The IRS notice includes twelve compliance questions offering helpful examples of how various situations should be applied. If you haven’t already asked any of these yourself, they may give you something to think about.

Here are a couple examples of FAQ and answers provided by the IRS:

Q: How do the preventative service requirements apply to an HRA that is integrated with a group health plan?

A: Similar to the analysis of the annual dollar limit prohibition, an HRA that is integrated with a group health plan will comply with the preventive services requirements if the group health plan with which the HRA is integrated complies with the preventive services requirements.

Q: How do market reforms apply to a health FSA that does not qualify as excepted benefits?

A: The market reforms do not apply to a group health plan in relation to its provision of benefits that are excepted benefits. Health FSAs are group health plans but will be considered to provide only excepted benefits if the employer also makes available group health plan coverage that is not limited to excepted benefits and the health FSA is structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the health FSA for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election). Therefore, a health FSA that is considered to provide only excepted benefits is not subject to the market reforms

All of the provisions within the notice are for healthcare plan years starting on or after Jan. 1, 2014, so it’s best to make yourself familiar with them now.

In addition to FAQ, the notice also provides help for the IRS’ tax rules on qualified benefits as well as employee assistance programs.

The notice is the result of a collaboration between the IRS, Department of Labor (DOL) and Health and Human Services (HHS).