Common Questions under the Health Care Reform Laws – Part 6

Larry Grudzien

December 27, 2010


My client sponsors an insured high deductible health plan (HDHP) with a Health Reimbursement Arrangement (HRA). The HRA reimburses participants any medical expense not paid by HDHP because the participant doe not meet the deductible and co-payment requirements of the HDHP. For the next plan year, the terms of HDHP are not being changed, but the employer is lowering the amount that it is making available to participants under the HRA.  If the employer decreases its contributions to HRA enough to lose grandfathered status (more than 5 percentage points), will the insured HDHP also lose its grandfathered status?

Yes.  This situation is not directly addressed in the grandfather regulations. The regulations does indicate that the determination  of grandfathered status is made separately with respect to each benefit package made available under the group health plan or health insurance coverage. Because the HRA is integrated with the HDHP, it will be seen as one plan.

If the employer lowers the amount available under the HRA by more than 5 percentage points, it will cause the entire plan (HDHP + HRA) to lose grandfathered status.

It would helpful if the various government agencies address this situation when the regulations are finalized.