June 30, 2006
HRA Updates for Public Sector Employers
This alert updates the alerts we previously issued on October 19, 2005, and January 24, 2006, regarding HRAs. Links to the previously issued alerts are as follows:
Transition Period Ending. For public sector employers operating on a July 1 fiscal year, the HRA must be brought into compliance by July 1, 2006.
Minnesota State Sponsored Plan (MSRS HCSP). It is our understanding that MSRS HCSP has made changes to its plan effective July 1, 2006. Employers should be receiving notification soon.
Enforcement. IRS Office of Federal, State and Local Governments (FSLG) specifically indicated the IRS was investigating an employer with an HRA with features that appear to not be in compliance. The link to the article is as follows: http://www.irs.gov/govt/fslg/article/0,,id=103384,00.html
REMEMBER: The IRS informally remarked that it is the employer’s responsibility to make sure the plan is compliant; not the vendor’s responsibility. See January 24, 2006, Alert.
Action Items:
- Review the plan document.
- Contact the service provider(s) regarding compliance.
- Amend plan if necessary.
- Communicate changes to account holders!!
lf you would like assistance with these items, please contact us.