Please clarify on a HRA

by Melissa

Our pastor has health insurance through his wife's employment. We have a HRA whereby we reimburse him for their out-of-pocket expenses such as co-pays, etc. There is an annual budgeted amount for the HRA. The pastor is the only person covered by the HRA because he is our only full-time employee. We have three part time workers who are not covered.

Is it okay for us to continue as we have been doing?

We were told we did not have to provide health insurance under the new law because we had less than 15 employees.
Thank you.

Comments for Please clarify on a HRA

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Jan 08, 2014
Stand Alone HRAs NOT Allowed under ACA
by: Vickey

You are correct in that you do not have to provide health insurance under the new law because you have less than 50 employees.

It’s the HRA where it’s going to get sticky. Here is the response from the CPA who wrote this article:

Per this article on Health Reimbursement Arrangements (HRAs):

Stand-alone HRAs (HRAs NOT grouped with a qualified health insurance plan) are not allowed. Stand-alone HRAs must be converted to integrated HRAs or terminated.

However, upon even more research this option was uncovered:

The Guidance constructs two cases where an employer's stand alone HRA can be integrated with an ACA group plan sponsored by another employer.

HOWEVER, both cases require that the employer sponsoring the stand alone HRA offer a group plan, that the employee declined to be covered on a spouse's plan.

Said differently, the church must offer a group plan that the Pastor declines and elects the qualifying coverage from the spouse's plan for the HRA to be integrated.

This raises the ethical issue that the church could “offer" a group plan that "no one enrolls in"(-insert a wink and a nod here-). I think Proverbs 6:10-19 addresses such behavior.

Jan 08, 2014
by: Melissa

Thank you for your response. We definitely do not want to offer a "non existent" plan. Are flexible spending accounts still allowed? Maybe we could convert it to that.

Jan 08, 2014
by: Sandi

Our pastor is covered under his self-employment plan, and we do the HRA through the main office (AFLC).
It is our understanding that that works, at least for now.
You might want to check with the spouse coverage to see if they can set up an HRA for the pastor? my thought is that it doesn't hurt to ask...

I think it is a very unfriendly system at this point...

continue to pray for our government

Jan 08, 2014
Keeping Our Churches ACA Compliant
by: Vickey

I agree with you, Sandi, it is an unfriendly system and I'm afraid it is going to get a lot more "unfriendly" before it is over. I'm praying too.

Melissa, I believe it is basically the same thing and would fall under the same rules, but this is getting way out of my field of expertise.

Please consult a professional employee benefits consultant or the administrator of the HRA plan.

They are the "experts" and can hopefully step up and give us some guidance on these section 105 plans and keeping our churches ACA compliant.

"Section 105 of the Internal Revenue Service (IRS) regulations allows for reimbursement of medical expenses under an employer-sponsored health plan. There are various types of Section 105 plans including: Health Reimbursement Arrangements, Medical Expense Reimbursement Plans, Accident and Health Plans, and more.)

Jan 08, 2014
by: Melissa

Thanks again to both of you. I will update if I find any more reliable information.

Jan 05, 2016
One-Person Stand-Alone HRA
by: Anonymous

In IRS Notification 2015-87, Part II A, a principle established in IRS notification 2013-54 is reiterated explicitly:

HRA's that cover fewer than two current employees (presumably one-employee situations, such as a non-profit church with one employee), are NOT subject to ACA market reforms, and therefore are compliant. However, if one utilizes such an arrangment, the employee who uses an HRA to cover premiums from an individual market plan is ineligible for a premium tax credit.

In other words, if our church only has one minister, we could still maintain an HRA arrangement for reimbursing his medical expenses, including premiums for individual health care, and be compliant. Is this correct?

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