Federal regulators have come out with semiofficial guidance that could affect employer clients who are trying to shut down their health plans and send the enrollees to the public exchange system.
Officials at the U.S. Department of Labor, the U.S. Department of Health and Human Services (HHS) and the U.S. Treasury Department have rejected three strategies for “sending the workers to the exchange” in a new set of answers to frequently asked questions about implementation of the Patient Protection and Affordable Care Act (PPACA).
In the PPACA FAQs Part XXII, officials oppose three exchange-shift strategies. The officials base the answers on the reasoning used in an official batch of guidance on health reimbursement arrangements (HRAs) that was published in September 2013, and two more sets of guidance that were published in May.
The officials say the general principle is that employers cannot meet the PPACA employer coverage mandate standards described in Internal Revenue Code Section 4980D by combining an “employer health care arrangement” with individual health insurance policies.
For more on which employers the FAQ guidance could affect, and how, read on.
1. Your client just gave the workers cash and told them to buy their own health coverage.
If the employer simply gives the workers a raise and lets them spend it however they want, that might not cause a problem.
If the employer tells the workers to use the money to buy health coverage, that qualifies as “group health plan coverage” under Internal Revenue Code 9832(a) and other laws.