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AUG 2 6 2010 

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, 

LEGAL PROCESSING DIVISION 

PUBLICATION &. REGULATIONS 

BRANCH As of: August 26, 2010 

PUBLIC 

SUBMISSION 

Received: August 26, 2010 

Status: Posted 

Posted: August 26, 2010 

Tracking No. 80b3b7d1 

Comments Due: August 27, 2010 

Submission Type: Web 

Docket: IRS-2010-0015 

Requirements for Group Health Plans and Health Insurance Issuers under the Patient Protection 

and Affordable Care Act 

Comment On: IRS-2010-0015-0002 

Patient Protection and Affordable Care Act: Preexisting Condition Exclusions, Lifetime and Annual 

Limits, Rescissions, and PatientProtections 

Document: IRS-2010-0015-0015 

Comment on FR Doc # 2010-15278 

Submitter Information 

Name: Juhl L Stoesz 

Address: 

9089 East Bahia Drive, Suite 100 

Scottsdale, AZ, 85250 

Phone: 800-678-9181 

Fax: 480-850-2618 

Submitter's Representative: Juhl Stoesz 

Organization: Beneco 

General Comment 

See attached file(s) 

Attachments 

IRS-2010-0015-0015.1: Comment on FR Doc # 2010-15278 

https:llfdms.erulemaking.netlfdms-web-agency IcomponentisubmitterInfoCoverPage ?Call=... 8/26/2010 
IQ 


BE~NECO 

August 26, 2010 

VIA Electronic Submission to http://\\-'Ww.regulations.gov 

Douglas H. Shulman 

Commissioner 

Intemal Revenue Service 

CC:PA:LPD:PR (REG-120399-1 0) 

Room 5205 

P.O. Box 7604 

Ben Franklin Station 

Washington, DC 20044 

Re: REG-120399-10 Written Comments on Interim 

Final Regulations Regarding Affordable Care Act's 

Rules on Lifetime and Annual Limits on Benefits 

Dear Commissioner. Shulman: 

Beneco appreciates this opportunity to comment on the interim final regulations 

which address the lifetime and annual limit provisions of the Patient Protection and 

Affordable Care Act (hereinafter the "Affordable Care AcC) as requested by th! 

Department of Treasury, the Department of Labor. and the Department of Health and 

Human Services (hereinaflerthe "DepaI1mcnts") in 75 Fed. Reg. 37188 (June 28. 2010). 

Beneeo is a service provider for health and welfare plans across the United States. 

Many of the companies that Beneco services have begun using HRA I plans to help their 

employees mitigate the effect of increasing health care costs. Due to the potential impact 

that this regulation may have on its clients, Beneco feels compelled to weigh in on thi.s 

Issue. 

Discussion 

As mentioned above, an employer choosing to offer an HRA (stand-alone or 

otherwise) to its employees typical1y docs so to help its employees reduce the effect or~ 

increasing health care costs. This is accomplished when the employer reimburses it~i 

employees for qualifying medical expenses2 incurred by the employee. his or her spouse, 

and qualifying dependents. In practice, the employer operates an HRA in one of two 

ways: (1) actual reimbursement by the employer out or the company's general assets, or 

(2) reimbursement from a trust or account which is funded by the employer to meet it!; 

Corporate Office: Direct: 480-850-2500 I 800-678-9181 I Fax: 480-850-2618 I 9089 E. Bahia Drive, Suite 100 I Scottsdale, AZ 85260 
Douglas Shulman 

Internal Revenue Service 

August 26, 2010 

Page 2 

reimbursement obligations. In either case, an HRA is not generally required to reimburse 

a claim ifthere are not sufficient funds to pay the claim. 

In the preamble to the interim final regulations, the Departments request 

comments regarding whether the lifetime and annual limitation prohibitions of section 

2711 of the Public Health Service Act should apply to stand-alone HRAs that are not 

retiree-only plans. For the following reasons, Bencco believes that they should not. 

A. 	 Stand-Alone HRAs are Akin to FSAs, MSAs, and HSAs 

Beneco believes that HRAs are subject to statutory provisions that require that the 

contributions and benefits be limited. The preamble to the interim tinal regulations 

provides that health flexible spending an-angements ("health FSAs"), Medical Savings 

Accounts ("MSAs"), and Health Savings Accounts ("HSAs") would not be subject to the 

lifetime and annual limits restriction. The preamble goes on to state that this exclusion is 

due in part to the fact that these account-based plans "are subject to specific statutory 

provisions that require that the contributions be limited" and because "other rules apply 

to limit the benefits available." 

Beneco agrees that the reasoning for this exclusion is logical, but feels that it 

should be extended to stand-alone non-retiree HRAs. We believe in the case of FSAs, 

MSAs, HSAs, and HRAs there exists two conflicting statutory provisions that are 

ilTeconcilable. While it is true that HRAs are not subject to a specific dollar limitation, 

typically they are effectively limited by the nondiscrimination provisions under 26 U.S.c. 

§ 1 05(h). Section 105(h) lays out both nondiscriminatory eligibi lity and 

nondiscriminatory benefits requirements that serve to limit the an10unt of reimbursement 

available. In practice, the nondiscrimination provisions of section 105(h) actually limit 

contributions and benefits to an amount that the employer determines it can afford to pay. 

Without an exclusion fbr stand-alone non-retiree HRAs from the lifetime and annual limit 

prohibition, the nondiscrimination provisions of section I05(h) would be in direct connict 

with the prohibition and rendered useless. 

B. 	 A Prohibition Against Lifetime and Annual Limits Could Make Stand-Alone 

HRAs Impractical 

Unlike a fully-insured group health plan, HRAs are self-insured medical plans for 

which the funding must be solely provided by the employer. Whether the employer 

chooses to pre-fund the plan by making periodic contributions to a trust, or pays 

reimbursement requests on an ad hoc basis through the company's general assets, a 

prohibition against the employer putting a limitation on the amount available would 

amount to an open-ended commitment by the employer. Given the fact that most standalone liRA plans are sponsored by small employers, this requirement would likely cause 

a severe financial hardship on the part of a sponsoring employer. The possibility of this 
Douglas Shulman 

Internal Revenue Service 

August 26, 2010 

Page 3 

extreme hardship would most likely lead employers to terminate their HRA plans in order 

to avoid being put in such an unwelcome position. 

Recommendation 

For the forgoing reasons, Beneco urges the Departments to exempt stand-alone 

HRAs that are not retiree-only plans from the lifetime and annual limitation prohibitions 

of section 2711 of the Public Health Service Act. 

If you have any questions or need additional information, please feel free to 

contact me at (800) 678-9181. 

Respectfully submitted, 

Beneco Systems, LLC 

Is! 

Juhl L. Stoesz, Esq. 

Legal Counsel 

I HRA means a health reimbursement arrangements within the meaning of IRS Notice 2002-45 and an 


accident and health plan within the meaning of26 U.S.C. § 105. 


2 HRAs may be used to reimburse only substantiated medical expenses defined under 26 U.S.c. § 213{d).