United States: The Affordable Care Act's Reporting Requirements For Carriers And Employers (Part 16 Of 24): Reporting For, And Clearing Up Confusion Over, Post-65 Retiree Health Reimbursement Arrangements

In an earlier post, we reported on a troubling development in the draft 2015 instructions for Forms 1094-B and 1095-B which, if adopted, would have required sponsors of Health Reimbursement Arrangements ("HRA") to issue separate Forms 1095-B and transmit on Form 1094-C when the HRA was integrated with fully-insured coverage. We argued in that post that this made little sense under the circumstances, as covered individuals were already receiving a Form 1095-B for the fully-insured coverage. We were therefore pleased to see the IRS change course in the final 2015 Instructions. There, the IRS adopted a rule under which,

"An employer with an insured major medical plan and HRA coverage for which an individual is eligible because the individual enrolls in the insured major medical plan is not required to report the coverage under the HRA for an individual covered by both arrangements."

This rule applies only to coverage provided to active employees and only in instances where the employer sponsors both the fully-insured major medical plan and the HRA, however. Noting residual "confusion" about the reporting obligations that apply to retiree-HRAs, Notice 2015-68 offers some welcome clarification—which is the topic of this post.


While retiree coverage takes many forms, the most common is to provide a traditional indemnity or PPO plan for pre-Medicare eligible retirees and an HRA for Medicare eligible retirees. "Medicare eligible" for this purpose usually means that a retiree is actually enrolled in Medicare or a Medicare Advantage Plan. (For purposes of this post, we will assume that eligibility for the retiree-HRA is conditioned on Medicare enrollment.) In the typical case, the HRA may be applied to the purchase of a Medicare supplemental policy or may be used to pay Part B premiums or other non-covered medical costs.

The subject of the reporting of post-age 65 retiree-HRAs is addressed in the final Code § 6055 regulations. Treas. Reg. § 1.6055-1(d)(2) provides as follows:

No reporting is required under paragraph (a) of this section [i.e., the regulation's basic reporting requirement] for minimum essential coverage that provides benefits in addition or as a supplement to a health plan or arrangement that constitutes minimum essential coverage if–

(i)         The primary and supplemental coverages have the same plan sponsor; or

(ii)        The coverage supplements government-sponsored coverage (as defined in section 5000A(f)(1)(A) and the regulations under that section) such as Medicare.

Minimum essential coverage includes coverage under an "eligible employer-sponsored plan," which is defined to mean a group health plan that provides "medical care" (which a retiree-HRA does), but it does not include a plan that provides only excepted benefits (which a retiree-HRA does not). A retiree-HRA satisfies clause (ii) of the regulation cited above, since the coverage that the HRA supplements is Medicare. So if one reads only the final regulations, it would seem that reporting is not required. But the 2015 final instructions are less than clear on the subject. Here is what they have to say:

Coverage in More Than One Type of Minimum Essential Coverage

If an individual is covered by more than one type of minimum essential coverage, reporting is required of only one of the types, if one of the following rules applies.

  • If an individual is covered by more than one type of minimum essential coverage provided by the same provider, the provider is required to report only one of the types of coverage.
  • A provider of minimum essential coverage generally is not required to report coverage for which an individual is eligible only if the individual is covered by other minimum essential coverage for which reporting is required. (For employer-sponsored coverage, this exception applies only if both types of coverage are under group health plans of the same employer).

Under the first exception, if an individual is covered by a self-insured major medical plan and a health reimbursement arrangement (HRA) provided by the same employer, the employer is the provider of both types of coverage and therefore is required to report the coverage of the individual under only one of the arrangements.

The second exception applies in the following situations.

  • An insurance company offering a Medicare or TRICARE supplement for which only individuals enrolled in Medicare or TRICARE are eligible is not required to report coverage under the Medicare or TRICARE supplement.
  • A state Medicaid agency is not required to report Medicaid coverage for which only individuals enrolled in other minimum essential coverage, such as employer-sponsored coverage or a qualified health plan, are eligible.
  • An employer with an insured major medical plan and HRA coverage for which an individual is eligible because the individual enrolls in the insured major medical plan is not required to report the coverage under the HRA for an individual covered by both arrangements.

The problem with the second paragraph is that it appears to limit the second exception, perhaps unnecessarily. The first bullet point refers to "an insurance company offering a Medicare . . . supplement" and the third-bullet point refers to enrollment in an insured major medical plan. Noticeably absent is an exception for an employer-sponsored retiree-HRA, eligibility for which is conditioned on Medicare enrollment.

Notice 2015-68 to the rescue

While not referring expressly to retiree-HRAs, Notice 2015-68 acknowledges the problem and offers a solution:

The supplemental coverage rule in § 1.6055-1(d)(2) is intended to eliminate duplicate reporting of an individual's minimum essential coverage under circumstances when there is reasonable certainty that the provider of the "primary" coverage will report. This rule has proven to be confusing. Accordingly, the Treasury Department and the IRS anticipate proposing regulations that would replace this rule with rules providing that (1) if an individual is covered by multiple minimum essential coverage plans or programs provided by the same provider, reporting is required for only one of them; and (2) reporting generally is not required for an individual's minimum essential coverage for which an individual is eligible only if the individual is covered by other minimum essential coverage for which § 6055 reporting is required.

(Emphasis added).

Under the regulation as currently constituted, reporting is not required in the case of supplemental minimum essential coverage in two discrete instances. The first is where the supplemental coverage and the primary coverage have the same plan sponsor. The second is where the coverage "supplements government-sponsored coverage . . . such as Medicare." The proposed change to the final regulation, which is anticipated by the final 2015 instructions, appears to narrow the first prong, since the coverage must be from the same "provider" rather than the same plan sponsor. It enlarges the second prong, however, also in a way that is anticipated by the final regulations.

The 2015 final instructions to Form 1094-B and 1095-C and the changes to the final Code § 6055 regulations presaged by Notice 2015-68 are nearly identical, but the latter is not burdened by any further clarifications. According to Notice 2015-68, therefore, an employer-sponsored retiree-HRA that conditions participation on Medicare enrollment need not be separately reported on Form 1095-B, which is what we thought the current regulation said.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Alden J. Bianchi
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