Employers should think twice before cutting workers or retirees a check and shipping them off to use the exchanges.
The Employee Benefits Security Administration, an arm of the U.S. Department of Labor, has told employers and their brokers just that in Technical Release 2013-03.
In the release, EBSA officials explain how they believe the Patient Protection and Affordable Care Act (PPACA) applies to health reimbursement arrangements (HRAs), health flexible spending arrangements (FSAs) and other benefits programs.
EBSA officials say they will treat a stand-alone HRA as a group health plan.
PPACA will prohibit employer-paid plans from imposing annual or lifetime benefits limits.
If an employer tried to use either a stand-alone HRA or any other mechanism to give each worker a fixed amount of cash the worker could use to buy individual coverage, that would violate the PPACA ban on annual benefits limits, and offering the coverage would not help the employer comply with the new PPACA minimum coverage rules, officials write in the new technical release.