IRS developing guidance on integrated health reimbursement arrangements

The Internal Revenue Service issued a notice Monday saying it is developing guidance on integrated health reimbursement arrangements and how taxpayers and businesses can avoid extra penalties and payments.

The notice relates to a recent set of proposed regulations expanding the usability of health reimbursement arrangements by lifting the current prohibition on integrating HRAs with individual health insurance if certain conditions are met. That would enable employers to offer their workers integrated HRAs instead of the more traditional group health plans.

Notice 2018-88 asks for comments on some of the potential approaches the Treasury Department and the IRS could use to help employers understand how to structure integrated HRAs to avoid assessable payments under section 4980H of the tax code and the potential loss of the exclusion from income for employer-provided health benefits under section 105(h).

The proposed regulations also describe when individuals who are offered coverage under an integrated HRA, but are otherwise eligible for a premium tax credit, would still be eligible for the tax credit. The proposed regulations do raise issues, however, concerning the application of the employer shared responsibility provisions of the Affordable Care Act and section 105(h), which addresses discriminatory self-insured group health plans, to employers who offer integrated HRAs and their employees.

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The IRS headquarters building in Washington, D.C.

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