https://fdms.erulemaking.net/...y/component/submitterInfoCoverPage?Call=Print&PrintId=0900006480b19f8f&Comment=true[8/23/2010 9:16:27 AM]

PUBLIC SUBMISSION

As of: August 23, 2010

Received: July 14, 2010

Status: Pending_Post

Tracking No. 80b19f8f

Comments Due: August 27, 2010

Submission Type: Web

Docket: HHS-OS-2010-0014

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

Rescissions, and PatientProtections

Comment On: HHS-OS-2010-0014-0001

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

Rescissions, and PatientProtections

Document: HHS-OS-2010-0014-DRAFT-0011

Comment on FR Doc # 2010-15278

Submitter Information

Name: Joe Cowles

Organization: Commonwealth of Kentucky, Personnel Cabinet, Department of Employee Insurance

General Comment

See attached file(s)

Attachments

HHS-OS-2010-0014-DRAFT-0011.1: Comment on FR Doc # 2010-15278
RE: OCIIO–9994–IFC 

The Department of Labor and Department of Health and Human Services request comments 

regarding the application of PHS Act section 2711 to stand-alone HRAs that are not retiree-only 

plans. 

The Patient Protection and Affordable Care Act Interim Final Regulation state as follows 

concerning lifetime and annual limits for HRA’s: 

“Health Reimbursement Arrangements (HRAs) are another type of account based 

health plan and typically consist of a promise by an employer to reimburse 

medical expenses for the year up to a certain amount, with unused amounts 

available to reimburse medical expenses in future years. See Notice 2002–45, 

2002–28 IRB 93; Rev. Rul. 2002–41, 2002–28 IRB 75. When HRAs are 

integrated with other coverage as part of a group health plan and the other 

coverage alone would comply with the requirements of PHS Act section 2711, 

the fact that benefits under the HRA by itself are limited does not violate PHS 

Act section 2711 because the combined benefit satisfies the requirements. Also, 

in the case of a stand-alone HRA that is limited to retirees, the exemption from 

the requirements of ERISA and the Code relating to the Affordable Care Act for 

plans with fewer than two current employees means that the retiree-only HRA is 

generally not subject to the rules in PHS Act section 2711 relating to annual 

limits. The Departments request comments regarding the application of PHS Act 

section 2711 to stand-alone HRAs that are not retiree-only plans.” 

The Public Employee Health Insurance Program maintains a general purpose stand-alone HRA. 

The stand-alone HRA was established by the Kentucky General Assembly in 2006. Plan members 

that elect said stand-alone HRA typically have health insurance coverage through a spouse and 

therefore use the HRA dollars to pay co-pays and other of pocket expenses. 

Currently, the stand-alone HRA provides $175 per month with a maximum annual limit of 

$2,100.00 with the ability to roll any unused funds to the next plan year. Approximately 25,000 

members elected the stand-alone HRA option for the 2010 plan year. There are no other annual or 

lifetime limits. There is authority to reduce this annual limit and otherwise change the stand-alone 

HRA. As a result of intense budget pressure this is something under consideration for plan years 

2011 and 2012. 

Should it be determined that stand-alone HRA’s are subject to annual and lifetime limits 

restrictions, a potential conflict exists between a state statute and the new federal regulations. This 

will create complexity for compliance and confusion for plan members. Moreover, by making 

stand-alone HRA’s subject to annual limit restrictions, the future of this stand-alone HRA, and 

other stand-alone HRA’s being offered as a benefit to employees in the future would be in doubt. 

There does not appear to be a reasonable distinction between a retiree-only stand-alone HRA and 

the stand-alone HRA referenced above. The Public Employee Health Insurance Program standalone HRA is a coveted and valued benefit for members. Mandating annual and lifetime 

restrictions on stand-alone HRA’s will not ensure “that patients are not confronted with 

devastating health costs because they have exhausted their health coverage when faced with a 

serious medical condition.” Nor does an adding said restriction “...help ensure that more 

Americans with chronic, long-term, and/or expensive illnesses have access to quality health 

coverage.” In short, for purposes of annual limits, the stand-alone HRA is used by its participants 
in the same way as a health flexible spending account, medical savings account or health savings 

account would be and should be given same immunity from restrictions. 

Based on the aforementioned, stand-alone HRA’s should be exempt from PHS Act section 2711 

and annual and lifetime limit restrictions. At least for the Public Employee Health Insurance 

Program, making stand-alone HRA’s subject to the annual limit restrictions will have a negative 

impact on a valuable employer sponsored benefit. In the alternative, if it is determined that the 

restrictions do apply, the effective date should be substantially delayed in recognition of the fact 

that the state legislature might have to amend the statute and to limit the negative impact on plan 

members.