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Notice 2018-88: Health reimbursement arrangements, future proposed regulations

Health reimbursement arrangements

The IRS today released an advance version of Notice 2018-88 that is intended to initiate and inform the process of developing guidance under sections 4980H and 105(h) and to address certain issues.


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Notice 2018-88 [PDF 339 KB] requests comments on potential approaches developed by the IRS and Treasury Department so employers understand how to structure integrated health reimbursement arrangements (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 is related to proposed regulations issued in October 2018. Read TaxNewsFlashThose 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 (under regulations being proposed by the Treasury Department and IRS)

The proposed integration regulations and the proposed PTC regulations would raise issues concerning the application of section 4980H (the employer shared responsibility provisions) and section 105(h) (addressing discriminatory self-insured group health plans) to employers offering integrated HRAs and their employees.

The IRS and Treasury have invited comments concerning issues addressed in the notice and on any other tax issues related to individual coverage HRAs. Comments are due no later than December 28, 2018.

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