CurrentMedicarePolicy N/A

Procedural Guidance for States to Recommend Restricting Certain Excepted Benefit Health Reimbursement Arrangements from Reimbursing Premiums for Short-term, Limited-duration Insurance

Guidance for state authorities on how to submit written recommendations to HHS to restrict or discontinue restrictions on excepted benefit HRAs reimbursing STLDI premiums for certain small employers in their state.

Policy Summary

PayerMedicare

PolicyProcedural Guidance for States to Recommend Restricting Certain Excepted Benefit HRAs from Reimbursing STLDI Premiums

Policy CodePolicy N/A

Change TypeNo material changes

Effective DateFeb 7, 2020

Next Review DateN/A

Key ActionState insurance commissioner or designated state official must sign and email the written recommendation to marketreform@cms.hhs.gov.

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

fewer than 10states expected to submit recommendations annually

6 monthstypical lead time before restriction applies

30 dayssecondary review timeframe

State Restriction Criteria

Criteria and process for restriction or discontinuance

Conditions under which HHS may impose or discontinue a state-level restriction on excepted benefit HRAs reimbursing STLDI premiums:

Policy Summary

PayerMedicare

PolicyProcedural Guidance for States to Recommend Restricting Certain Excepted Benefit HRAs from Reimbursing STLDI Premiums

Policy CodePolicy N/A

Change TypeNo material changes

Effective DateFeb 7, 2020

Next Review DateN/A

Key ActionState insurance commissioner or designated state official must sign and email the written recommendation to marketreform@cms.hhs.gov.

SourceLink

On This Page

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Restriction applies only to excepted benefit HRAs offered by small employers (as defined in PHS Act section 2791(e)(4)).

Restriction applies only where the other group health plan offered by the small employer is fully insured or partially insured.

The Secretary of HHS, in consultation with the Secretaries of Labor and the Treasury, must find that reimbursement of STLDI premiums by such HRAs has caused significant harm to the State's small group market (the State is the principal place of business of the applicable small employers).

The State must submit a written recommendation signed by the applicable state authority (state insurance commissioner or designated official), in the form and manner specified by HHS, including evidence of actual (not merely potential) significant harm and may recommend an effective date.

HHS will evaluate recommendations on a case-by-case basis and may request additional information to assist with review.

Evidence must demonstrate actual significant harm to the small group market — examples include impacts on issuer participation, magnitude of premium increases, enrollment declines, and deterioration of the small group market risk pool — to the extent related to purchases of STLDI with premiums reimbursed by excepted benefit HRAs.

If the finding is made, HHS will publish a Federal Register notice imposing a prospective restriction; restrictions apply only prospectively and allow reasonable time for plan sponsors to comply.

Anticipated timing: HHS generally expects a restriction to apply for HRA plan years beginning on or after 6 months after Federal Register publication; a State may request an expedited or delayed effective date with justification in its recommendation.

Discontinuance: a State may request discontinuance of a previously-approved restriction by submitting a request and explanation (and may recommend an effective discontinuance date); if approved HHS will publish a Federal Register notice specifying a prospective effective date that provides reasonable time for plan sponsors and issuers to adjust.

If HHS declines to make the finding, the State may request a secondary review within 30 calendar days and submit additional evidence; final agency action follows secondary review.

Submission instruction: the written recommendation (or discontinuance request) must be emailed to HHS at marketreform@cms.hhs.gov and States are encouraged to submit well in advance of the requested effective date so Departments have sufficient time to review.

Regulatory Citations and Limits

Relevant regulatory citationsmixed

26 CFR 54.9831-1(c)(3)(viii)(F)	Regulatory citation related to excepted benefit HRAs and STLDI reimbursement
29 CFR 2590.732(c)(3)(viii)(F)	Regulatory citation related to excepted benefit HRAs and STLDI reimbursement
45 CFR 146.145(b)(3)(viii)(F)	Regulatory citation related to excepted benefit HRAs and STLDI reimbursement

HRA annual dollar limit — $1,800 adjusted annually

Annual HRA dollar limit$1,800 per plan year, adjusted annually as specified in the HRA rule

Adjustment mechanismAdjusted annually in the manner set forth in the HRA rule (see regulatory citations)

Applicability dateLimit applies for plan years beginning on or after January 1, 2020

State Submission Actions and Outcomes

Documentation Required

Signed submission by state insurance commissioner (email to HHS)

The written recommendation must be signed by the state insurance commissioner or other state official(s) designated by the state to enforce the PHS Act title XXVII requirements and submitted by email to HHS at marketreform@cms.hhs.gov.

Note

Request discontinuance with explanation and proposed effective date

A state may request discontinuance of a previously-approved restriction by submitting a request to discontinue plus an explanation and may recommend a proposed discontinuance effective date; discontinuances apply only prospectively with reasonable time for plan sponsors and issuers to adjust, and the recommendation must be emailed to marketreform@cms.hhs.gov.

Submit a request to discontinue the restriction and an explanation of why discontinuance is sought.
You may recommend the date upon which the restriction should be discontinued.
Discontinuance applies prospectively and allows reasonable time for plan sponsors and issuers to adjust.

Key Terms

Excepted benefit HRA — definition entry

DefinitionAn excepted benefit HRA is the limited excepted benefit created by the HRA rule that may provide benefits without being subject to title XXVII market requirements when statutory conditions are met

Reimbursement allowanceThe HRA rule does not generally prohibit reimbursement of short-term, limited-duration insurance (STLDI) premiums by excepted benefit HRAs, though states may seek restrictions under specified criteria

Key exclusionMay not reimburse premiums for individual health insurance coverage or group health plan coverage except where those coverages consist solely of excepted benefits (subject to specified exceptions)

Small employer — definition (PHS Act section 2791(e)(4))

Statutory definition referenceSmall employer as defined in PHS Act section 2791(e)(4)

Scope of restrictionRestrictions on reimbursement of STLDI premiums apply only to HRAs offered by small employers as so defined

Associated market concernRestriction is intended to address potential adverse selection in the small group market when small employers offer fully or partially insured other group health coverage alongside excepted benefit HRAs

STLDI — Short-term, limited-duration insurance definition

DefinitionShort-term, limited-duration insurance (STLDI) refers to individual market coverage designed to provide temporary health insurance for limited durations; reimbursement of STLDI premiums by excepted benefit HRAs is not generally prohibited by the HRA rule

Context for restrictionDepartments may restrict HRAs from reimbursing STLDI premiums for small-employer-sponsored HRAs in a state if specified criteria showing significant harm to the small group market are met

Regulatory linkageThe special rule addressing STLDI reimbursement is part of the HRA rule and is implemented in consultation among HHS, Labor, and Treasury