Notice 2018-88, HRAs

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IRS GuideWire Nov. 19, 2018

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Issue Number:    N-2018-88

Inside This Issue

Notice 2018-88, is intended to initiate and inform the process of developing guidance under sections 4980H and 105(h) that would address these issues, and requests comments on potential approaches developed by the Treasury Department and the IRS, so employers understand how to structure integrated HRAs to avoid assessable payments (section 4980H) and potential loss of the exclusion from income for employer-provided health benefits (section 105(h)).

Notice 2018-88 is  related to a notice of proposed rulemaking (REG-135724-17) issued on October 23, 2018 (83 FR 54420) that, in relevant part, would (a) remove the current prohibition on integrating HRAs with individual health insurance coverage (integrated HRAs) if certain conditions are met, allowing employers to offer employees integrated HRAs in lieu of providing more traditional group health plans (the proposed integration regulations being proposed by the Treasury Department, DOL and HHS); and (b) address when individuals offered coverage under an integrated HRA who are otherwise eligible for a premium tax credit (PTC) will remain eligible for the PTC (proposed PTC regulations being proposed by the Treasury Department and IRS). The proposed integration regulations and the proposed PTC regulations would raise issues concerning the application of section 4980H (the employer shared responsibility provisions) and section 105(h) (addressing discriminatory self-insured group health plans) to employers offering integrated HRAs and their employees.


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