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Proposed regulations: Employer shared-responsibility provisions, health reimbursement arrangements

Employer shared-responsibility provisions

The U.S. Treasury Department and IRS today released for publication in the Federal Register proposed regulations (REG-136401-18) intended to:


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  • Clarify the application of the employer shared-responsibility provisions and certain nondiscrimination rules to health reimbursement arrangements (HRAs) and other account-based group health plans integrated with individual health insurance coverage or Medicare (individual coverage HRAs)
  • Provide certain safe harbors with respect to the application of those provisions to individual coverage HRAs
  • Facilitate the adoption of individual coverage HRAs by employers by permitting taxpayers to rely on the proposed regulations

Read the proposed regulations [PDF 406 KB] (20 pages) as published in the Federal Register on September 30, 2019.

Comments and requests for a public hearing are due 90 days after September 30, 2019 (the date when the proposed regulations will appear in the Federal Register).


The IRS in November 2018 issued Notice 2018-88, requesting comments on potential approaches developed by the IRS and Treasury Department so employers would 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 stated that proposed regulations would:

  • Remove the current prohibition on integrating HRAs with individual health insurance coverage (integrated HRAs) if certain conditions are met
  • Allow employers to offer employees integrated HRAs in lieu of providing more traditional group health plans (the proposed integration regulations)
  • 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

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Proposed regulations

According to the preamble to today’s proposed regulations, Treasury and the IRS have taken into account the comments received in response to Notice 2018-88, as well as comments received in response to the proposed integration regulations and proposed PTC regulations.

Today’s proposed regulations under sections 4980H and 105 are intended to clarify the application of those provisions to individual-coverage HRAs and to provide related safe harbors to ease the administrative burdens of avoiding liability under section 4980H and avoiding income inclusion under section 105(h). 

The proposed regulations, in part, address:

  • Location-related issues (for example, an employee's primary site of employment for purposes of section 4980H)
  • Age-related issues (including consideration of an age-related safe harbor and the age used to determine the premium of the affordability plan for purposes of section 4980H)
  • Look-back month safe harbor (allowing employers to use prior premium information to determine affordability for purposes of section 4980H)
  • Consistency requirements and conditions for safe harbors

Effective date provisions

The proposed regulations under section 4980H are proposed to apply for periods beginning after December 31, 2019.

The proposed regulations under section 105(h) are proposed to apply for plan years beginning after December 31, 2019.

The preamble notes that employers may need guidance with respect to sections 4980H and/or 105(h) to design and implement programs involving individual coverage HRAs prior to the issuance of any final regulations and in advance of the plan year for which the individual coverage HRAs will be offered. Accordingly, to allow employers to offer individual coverage HRAs beginning on January 1, 2020, the preamble states that:

  • Taxpayers may rely on the proposed regulations under section 4980H for periods during any plan year of individual coverage HRAs beginning before the date that is six months following the publication of any final regulations.
  • Taxpayers may rely on the proposed regulations under section 105(h) for plan years of individual coverage HRAs beginning before the date that is six months following the publication of any final regulations.

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