This summer we wrote about an impending issue under the Affordable Care Act (“ACA”) for colleges and universities wishing to provide graduate student employees with a stipend or reimbursement to defray the cost of medical coverage under a student health plan. Though a common arrangement, guidance issued in connection with the implementation of the ACA meant that schools could be subject to severe penalties for, in effect, using a “health reimbursement arrangement” to reimburse the cost of individual (rather than group) healthcare coverage.

Earlier this year, Notice 2016-17 provided temporary relief by indicating that schools would not be penalized for any such arrangements with a plan year beginning prior to January 1, 2017. Last week, the agencies responsible for issuing ACA guidance released further FAQs indicating that this temporary relief will be extended indefinitely (pending further guidance).

This is good news for the many schools that have been unhappy about the options for restructuring their benefit plans in order to avoid penalties. Although the latest guidance does not guarantee a permanent fix, the reasoning contained therein suggests that the agencies are aware that a special rule should apply in the college and university setting. We will continue to monitor and keep you apprised of any further guidance issued in connection with the ACA and its effect on healthcare subsidies in the graduate student employee context.