Update: Health Reimbursement Arrangements for Working Retirees

Some annual conference benefit officers and treasurers have recently contacted Wespath Benefits and Investments (Wespath) with questions about working retirees who are covered by retiree health reimbursement arrangements (HRAs) for Medicare supplemental plans. The situations involve individuals who retire, are provided with a conference retiree HRA or similar retiree-health reimbursement benefit or account, and later are hired by or appointed to a local church or other UMC entity while remaining in the retired relationship. These questions involve the Affordable Care Act’s (ACA) prohibition on group health plans (which HRAs are considered) having annual dollar limits coupled with the fact that working retirees are considered “current” or “active” employees by these regulations. Violating the prohibition can result in penalties.¹

Wespath’s earlier guidance related to HRAs administered through OneExchange would not permit full-use HRAs for participants working for an employer eligible for the Medicare Secondary Payer small employer exception. This guidance is based on the ACA rule that generally an employer group health plan cannot have an annual limit, unless an exception to the ACA rule is identified.

Because of the recent questions about HRAs with annual limits covering retired clergy working for a church or other UMC entity, Wespath’s Legal and Center for Health teams are further researching the regulatory guidance related to this prohibition and its exceptions. Wespath plans to engage many of the conferences over the next few months to assess the frequency of this rehire fact pattern and necessary actions related to conference provided HRAs. Wespath plans to provide additional information and potential options to conferences as follows:

• White paper published to the Center for Health/Health Care Reform Website: mid- to late October (will also be announced via OnBoard Express)
• Conference calls open to all conferences: early to mid-November (dates/times will be communicated via OnBoard Express)

Should you have any questions, please contact your Conference Liaison.

¹ For background, see http://www.wespath.org/assets/1/7/4636.pdf (Health Care Reform—New Restrictions on Tax-Favored Health Coverage for HRAs, FSAs, Premium Payment or Reimbursement Plans, and Cafeteria Plans).

Copyright © Wespath Benefits and Investments,
a general agency of The United Methodist Church
Share your suggestions and comments about On Board Express