Finance News & Insights

Reform's new target: Executive health plans

Offering execs healthcare coverage that isn’t available to all workers is a fairly common business practice. But a lesser-known provision in the healthcare reform bill will likely change that soon.

Companies that offer this type of coverage could find themselves facing stiff penalties.

Reason: The healthcare reform expanded the nondiscrimination rules to all health plans – except those plans that retained their grandfathered status. The rules had previously only affected self-funded plans.

Under reform, any healthcare coverage or benefits for current or former executives (top 25 percentile by pay) that isn’t offered to non-executives are prohibited.

Here’s an example of this type of coverage: As a recruiting tool, a company begins healthcare coverage for the CFO on his or first day of employment. However, for all other employees, healthcare coverage doesn’t kick in until after the first 60 days of employment.

If your plan offers more favorable health benefits to any part of your workforce, you’ll want to take action.

One way to stay safe: Work with your provider to change your healthcare plan so that equal coverage is provided for all of your employees.

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