United States: Integrated Health Reimbursement Arrangements, Coordination With Family Coverage, And Notice 2015-87—Something's Missing

Issued at the end of last year, Notice 2015-87 provided detailed guidance on a host of topics. The notice has been referred to colloquially in some quarters as the "pot luck" notice. Among other things, the notice, in Q&A 4, clarifies the circumstances under which a Health Reimbursement Arrangement (HRA) will be treated as "integrated" with a group health plan where the HRA covers spouses and dependents. This is important because an HRA that is not integrated—i.e., a "stand-alone" HRA—will trigger penalties under certain of the Affordable Care Act's (ACA) insurance market reforms. As is often the case, however, while clarifying some issues, the notice raised other issues that practitioners and agency representatives are now addressing, and which are the subject of this post.

According to Notice 2015-87, Q&A 4, an HRA is integrated with an employer's group health plan coverage for purposes of the application of the ACA insurance market reforms "only as to the individuals who are enrolled in both the HRA and the employer's other group health plan." (Emphasis added). Thus, the level of coverage that an employee elects under an integrated HRA, i.e., self-only, self + 1, family, etc., must match the level of coverage under the group health plan with which the HRA is integrated. While the concept seems simple enough, the text of the notice is less than clear as to which group health plan the HRA must be integrated with and the timing of the integration of spouse and/or dependent coverage. At a recent bar forum, representatives of the IRS and the Treasury Department (who were speaking in their individual capacities and not in any official capacity) offered their opinions on these issues and the intent of Q&A 4.


At issue in Notice 2015-87, Q&A 4, is the application of the ACA annual dollar limit prohibition and preventive services requirement to HRAs. The issue was first raised (but not answered) in the preamble to the 2010 interim final regulations on the subject of lifetime and annual limits (at pages 37,190-191). The regulators subsequently settled the matter in Notice 2013-54, which established standards that, if satisfied, would qualify an HRA as "integrated" with a group health plan. An integrated HRA is deemed to piggy-back on the underlying group health plan's coverage and other features for purposes of complying with the ACA insurance market reforms. (For an extended discussion of Notice 2013-54 please see our Client Advisory of September 25, 2013.)

Notice 2013-54 was silent on the matter of who must be covered under the group health plan and the HRA. This question is raised in Notice 2015-87, Q&A 4, which asks:

"May an HRA available to reimburse the medical expenses of an employee's spouse and/or dependents (a family HRA) be integrated with self-only coverage under the employer's other group health plan?"

The answer is "No." But the balance of the answer does not align with the earlier notice in the following instances:

  • Notice 2013-54 says that an employee must have other group health plan coverage, sponsored either by his or her employer or a family member's employer, when amounts are credited to the employee's HRA account. Notice 2015-87 seems to say the integrated coverage must be maintained by his or employer.
  • Notice 2015-87 also says that in order for a family member's expenses to be reimbursed from the employee's HRA account, the family member must also have integrated coverage. The notice posits that the HRA can be "structured so eligibility for expense reimbursement will expand automatically when the family member has integrated coverage." Under Notice 2013-54, the employee must be enrolled in group health plan coverage when the employer credits amounts to the HRA. But under Notice 2015-87, it does not appear that the family member need be enrolled when the employer credits the HRA. For example, the employee could build up an HRA balance while enrolled in self-only coverage; he or she might subsequently switch to family coverage. This suggests that there is a different integration rule for employees than for family members—i.e., that a family member must have integrated coverage when his or her medical expense is incurred and not necessarily when the amounts used to reimburse the family member's expenses were credited to the employee's account.

As to the first bullet point, the government representative said that coverage under another group health plan of a different employer would qualify the HRA as integrated. They pointed out that this is the rule adopted in final regulations issued November 18, 2015 ("Final Rules for Grandfathered Plans, Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, Dependent Coverage, Appeals, and Patient Protections Under the Affordable Care Act"). The rules to which the government representatives refer are at Treas. Reg. §§ 54.9815-2711(d)(2)(i)(B) (governing plans that fail to provide minimum value) and 54.9815-2711(d)(2)(ii)(B) (governing plans that do provide minimum value). By way of example, Treas. Reg. § 54.9815-2711(d)(2)(i)(B) provides that an integrated HRA exists where:

"The employee receiving the HRA or other account-based plan is actually enrolled in a group health plan (other than the HRA or other account-based plan) that does not consist solely of excepted benefits, regardless of whether the plan is offered by the same plan sponsor." (Emphasis added).

As to the second bullet point, the government representatives offered an eminently reasonable approach: at no point should an employee, spouse or dependent be covered by the HRA and not by the employer's or other group health plan. Therefore, it appears that plan administrators will not be required to track HRA contributions to ensure that benefit payments to family members are being made from contributions credited to the HRA at a time during which the family member was actually covered. Though the matter of the impact of COBRA was not discussed, it appears that an employer could not offer a separate COBRA election for the integrated HRA, unless the employer maintained, and the HRA is properly structured as, a retiree HRA.

Notice 2015-87, Q&A 4, also recognizes the need for, and furnishes, transition relief under which Treasury and IRS will not treat an HRA available for the expenses of family members not enrolled in the employer's other group health plan for plan years beginning before January 1, 2016, as failing to be integrated with an employer's other group health plan for plan years beginning before January 1, 2016 (or for plan years beginning before January 1, 2017 where the HRA and group health plan would otherwise be integrated based on the terms of the plan as of December 16, 2015) "solely because the HRA covers expenses of one or more of an employee's family members even if those family members are not also enrolled in the employer's other group health plan." Thus, for plans with calendar year plan years, the rules governing HRA-coverage of spouses and dependents will not take effect until the 2017 plan year. As a result, there is some time for the regulators to clarify the questions raised above.

* * * * *

Special thanks to Robert F. Pizzo, Esq., Rochester, New York for initially raising the questions discussed in this post.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Alden J. Bianchi
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.