The Affordable Care Act (ACA) didn’t contain a rule that prohibited employers from enticing employees to pass on company-sponsored health plans and purchase exchange coverage instead — until now.
In conjunction with the Treasury and the Health and Human Services Department, the Department of Labor (DOL) just issued a new FAQ — the 22nd — which expressly prohibits two maneuvers some employers have been making to save on healthcare costs.
Here’s what the new FAQ says you can’t do:
1. Offer cash to help employees pay for individual market coverage
This is addressed by question No. 1 in the FAQ. This clarification closely mirrors that of the law’s prohibition against “stand-alone” health reimbursement accounts used to help employees purchase coverage on an insurance exchange.
The FAQ says an employer cannot provide cash — pre-tax or post-tax — to employees to help them purchase health insurance in the individual market. The DOL says because these arrangements cannot be integrated with a health policy, they violate some of the ACA’s rules — like the prohibitions on dollar limits for coverage.
What does that mean exactly? The DOL is saying such an arrangement constitutes a plan in and of itself for the purpose of providing medical care. And because an employer won’t offer an unlimited amount of cash to aid in an individual’s purchase of coverage, the “plan” has a cap on dollar limits — which is illegal under the ACA.
Such an arrangement could help employers save on health plan costs by encouraging fewer employees to enroll in company-sponsored coverage. The thinking is cash offers encouraging employees to forgo company-sponsored coverage would cost less than insuring the employees.
2. Offer high-risk employees a choice between plan enrollment or cash
This is addressed by question No. 2 in the FAQ. It says that an employer cannot approach an employee who is a high claims risk and offer the person the option of accepting cash (presumably to purchase coverage in the individual market) or enroll in a company-sponsored plan.
The DOL says this amounts to discrimination — because those with health problems would be receiving a benefit that’s not available to employees without health problems.
This was an approach some employers have taken to try to get unhealthy individuals off of their company-sponsored plans in an attempt to drive down premiums.
