2016 Healthcare Reform FACTS – Did you Know?

Many employers and consumers alike are unaware of the compliance regulations regarding reimbursement arrangements for health insurance under the Affordable Care Act.

Here are several facts to keep in mind:

• An employer may NOT offer cash to reimburse employees for the purchase of individual market plan policies.

Why?  First, the practice does NOT comply with market reforms under the Affordable Care Act. Since the offer of cash is done without regard for pre-tax or post-tax ramifications, it violates Public Health Service (PHS) Act under several sections including 2711 and 2713. In addition, this type of practice could trigger penalties (excise tax).

• An employer may NOT offer cash as reimbursement to high claims risk employees so they opt-out of the group plan.

Why? This violates HIPAA as it is considered to be health status discrimination and is prohibited under HIPAA and ACA. It also violates HIPAA’s privacy rule in that an employer is using personal health information (claims) to determine eligibility of a cash offer which is unrelated to a true plan administration activity. In addition, it is prohibited under IRS Code 125 and could result in a $100 per day fine against an employer.

For more information, visit www.dol.gov (Facts about Affordable Care Act Implementation (Part XXII)