An "employer payment plan" is an arrangement under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy, or uses its funds to directly pay the premium for an individual health insurance policy covering the employee.

Among other things, the IRS notice provides that an employer arrangement reimbursing the cost of individual market coverage offered under a cafeteria plan is an employer payment plan (whether or not funded solely by salary reduction or also including other employer contributions, such as flex credits), and cannot be integrated with the individual market coverage. Accordingly, such an arrangement will generally fail to satisfy the ACA market reforms applicable to group health plans. 

An HRA that is "integrated" with a group health plan-under either of two integration methods described in prior agency guidance-will comply with the ACA if the group health plan with which the HRA is integrated is compliant. Stand-alone HRAs (except for retiree-only HRAs and HRAs consisting solely of excepted benefits), and HRAs used to purchase coverage on the individual market do not comply with the ACA market reforms.
 

The IRS notice provides further guidance related to HRAs and integration, including clarifying that, subject to transition relief, an HRA is permitted to be integrated with an employer's group health plan only as to the individuals who are enrolled in both the HRA and the employer's group health plan. If an employee's spouse and/or dependents are not enrolled in the group health plan, the coverage of these individuals under the HRA cannot be integrated with the group health plan, and the HRA coverage generally will fail to meet the ACA market reform requirements.