Notice 2013-54 (April 10, 2014)

Health Care

From the Church Alliance to the Internal Revenue Service (IRS), Department of Labor, and Department of Health and Human Services commenting on Notice 2013-54 : Application of Market Reform and other Provisions of the Affordable Care Act to HRAs, Health FSAs, and Certain other Employer Healthcare Arrangements (the “Notice”). The Notice, published by the IRS in the fall of 2013, applied the Affordable Care Act’s market reforms, particularly the prohibition on annual limits, to health reimbursement arrangements and “employer payment plans”. Employer payment plans are informal premium reimbursement practices that thousands of local churches have relied upon for over 50 years. Generally, under these practices churches reimburse clergy and lay employees for the cost of premiums for individually purchased health insurance policies on a nontaxable basis. The Notice appears to prohibit these practices almost entirely. The comment letter explains the difficulties with the Notice for churches, asks for transition (non-enforcement) relief for 2014, and asks several clarifying questions.

Note that the transition relief requested was provided by the IRS, at least with respect to employers that are not “applicable large employers” under the Affordable Care Act, through June 30, 2015. See IRS Notice 2015-17 for more information: