Smart Benefits: Employers Can’t Pay for Purchase of Employees Individual Health Insurance
Monday, November 17, 2014
The Departments of Health and Human Services (HHS), Labor (DOL) and the Treasury recently released three FAQs that confirm employers can’t pay for the purchase of their employees’ individual insurance.
The newly release guidance stems from questions over whether either Section 125 (Cafeteria Plans) or Section 105 (Reimbursement Arrangements) of the IRS code allow employers to deduct premiums in a pre-tax manner or reimburse for individual premiums.
The FAQs make clear that any employer payment that provides cash reimbursement for the purchase of an individual market policy is not compliant with the Patient Protection and Affordable Care Act (PPACA), whether the employer treats the money as pre-tax or post-tax to the employee.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTLikewise, if a Section 105 reimbursement plan is set up for the purchase of individual policies, these plans are also noncompliant. That’s because, even if the employer doesn’t assist an employee with their plan selection, they are still taking part by contributing cash for the policy purchase.
The new guidance also specifies that employers can’t compensate employees who have a high claims risk to enroll in an exchange plan versus joining the group health plan if offers.
The excise fines for these violations, under Section 4980D, are $100 per day, per employee or $36,500 annually. However, these fines for each individual to whom such failure relates so if an employer also contributes to dependent coverage, the fines would also be incurred for each dependent per day as well.
Amy Gallagher has over 21 years of healthcare industry experience guiding employers and employees. As Vice President at Cornerstone Group, she advises large employers on all aspects of healthcare reform, benefit solutions, cost-containment strategies and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, and is often quoted by national publications on the subject matter. Locally, Amy is a member of SHRM-RI, the Rhode Island Business Group on Health, and the Rhode Island Business Healthcare Advisory Council.
Related Slideshow: New England’s Healthiest States 2013
The United Health Foundation recently released its 2013 annual reoprt: America's Health Rankings, which provides a comparative state by state analysis of several health measures to provide a comprehensive perspective of our nation's health issues. See how the New England states rank in the slides below.
Definitions
All Outcomes Rank: Outcomes represent what has already occurred, either through death, disease or missed days due to illness. In America's Health Rankings, outcomes include prevalence of diabetes, number of poor mental or physical health days in last 30 days, health disparity, infant mortality rate, cardiovascular death rate, cancer death rate and premature death. Outcomes account for 25% of the final ranking.
Determinants Rank: Determinants represent those actions that can affect the future health of the population. For clarity, determinants are divided into four groups: Behaviors, Community and Environment, Public and Health Policies, and Clinical Care. These four groups of measures influence the health outcomes of the population in a state, and improving these inputs will improve outcomes over time. Most measures are actually a combination of activities in all four groups.
Diabetes Rank: Based on percent of adults who responded yes to the question "Have you ever been told by a doctor that you have diabetes?" Does not include pre-diabetes or diabetes during pregnancy.
Smoking Rank: Based on percentage of adults who are current smokers (self-report smoking at least 100 cigarettes in their lifetime and currently smoke).
Obesity Rank: Based on percentage of adults who are obese, with a body mass index (BMI) of 30.0 or higher.
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