HSA-HRAs May Be Less Subsidized In Exchanges

IRS officials told an ECFC meeting in August that they are looking at changing an HRA provision of the almost-final IRS reg on exchange subsidies. The question was raised by Alston & Bird expert John Hickman, who noted CDH account premiums may be disadvantaged in exchanges if there is no subsidy adjustment for their higher deductibles. Whether an employee gets a pre-paid premium subsidy in the pending IRS reg depends on whether their premium is high – not adjusted for OOP costs. People with richer benefits will be subsidized first because their premiums are higher.

IRS officials said in reply that the initial reg subsidy is based only on whether a person’s family income is more than 9.5% of the premium for individual coverage. This also applies to individuals with family coverage. However, an official said off the record that the minimum essential benefit issues affecting HSAs and HRAs have not been finished yet. A final reg is expected to be published at the end of September that will include more detail on how subsdizies are calculated and dealing with the CDH issues.

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