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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

 

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

San Francisco Office

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104

 

www.wagnerlawgroup.com

 

 

 

 

December 18, 2014

 

 Health and Welfare Law Alert

 

 

 

 

ACA FAQs XXII Confirm that Employers Can't Reimburse Employees for

Individual Premiums

 

 

 

DOL, IRS and HHS have released FAQs about Affordable Care Act ("ACA") Implementation XXII ("FAQs XXII"). FAQs XXII provide additional guidance to employers on the reimbursement of employees' individual health insurance premiums. FAQs XXII make it clear that the Agencies believe that ACA's market reforms prevent any arrangement pursuant to which an employer provides cash reimbursements to employees for the purchase of an individual market policy, regardless of whether the reimbursement is paid on a pre- or after-tax basis.

 

Background. The Agencies have previously issued guidance regarding the status of various reimbursement arrangements under ACA. This guidance provided that employer premium reimbursement arrangements, through HRAs or other employer payment programs, are group health plans that must comply with ACA's group market reforms, including the prohibition on annual and lifetime dollar limits on essential health benefits and the preventive care coverage requirement.

 

Previous guidance clarified that HRAs will not violate these market reform provisions when integrated with a group health plan that complies with such provisions. However, premium reimbursement arrangements cannot be integrated with individual market policies to satisfy the market reforms, and such arrangements may be subject to penalties, including excise taxes under Internal Revenue Code ("Code") Section 4980D.

 

FAQs XXII. In FAQs XXII, the Agencies confirm that if an employer sponsors an arrangement that provides cash reimbursement for the purchase of an individual policy, the employer's payment arrangement is part of a program maintained for the purpose of providing medical care to employees. Thus, the arrangement is a group health plan that is subject to the group market reform provisions of the ACA. These arrangements cannot be integrated with individual market policies to satisfy market reforms, and therefore violate ACA's group market reform provisions. The Agencies have now stated that this rationale applies to these arrangements regardless of whether the reimbursement is made on a pre-tax, or after-tax, basis.

 

The Agencies next address the situation where an employer offers, but to only employees with high claims risk, a choice between enrolling in the employer's standard group health plan and receiving a cash opt-out bonus. Because this offer is not made to all employees, the guidance explains that such an arrangement violates HIPAA's prohibition against discrimination based on health factors.

 

Finally, the Agencies address arrangements where a vendor markets a product to employers claiming that employers can: (i) cancel their group policies, (ii) set up a Code Section 105 reimbursement plan that works with health insurance brokers or agents to help employees select individual market policies, and (iii) allow eligible employees to access premium tax credits to pay for marketplace coverage. According to FAQs XXII, these arrangements are impermissible and problematic for several reasons, including the fact that the arrangements themselves are group health plans, thereby disqualifying participating employees from premium tax credit eligibility.

 

Action Steps for Employers. In light of this new guidance and previous guidance published by the Agencies, employers sponsoring or contemplating engaging in these arrangements are advised to contact qualified employee benefits counsel for assistance in understanding the potential concerns raised by involvement in these practices. 

 

 

 

 

This Newsletter is protected by copyright. Material appearing herein may be reproduced with appropriate credit.

 

This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.