The Affordable Care Act (ACA) has proven unaffordable – and aggravating – for plenty of employers.
Here’s the latest shoe to drop: The federal departments of the Treasury, Health and Human Services and Labor are prohibiting two strategies that a number of firms had been using to curb healthcare costs.
Here’s what the feds’ FAQ says employers can’t do:
1. Offer cash to employees
The feds said employers can’t provide cash (pre-tax or post-tax) to employees to help them purchase health insurance on the individual market.
If this sounds familiar, that’s because it closely resembles the prohibition against “stand-alone” Health Retirement Accounts (HRAs) to help workers purchase coverage on the exchanges.
The feds clarified that offering cash for coverage would violate the ACA’s rules banning dollar limits for coverage. Reason: Such an arrangement constitutes a plan in and of itself for the purpose of providing medical care.
And because the lump sum isn’t an unlimited amount to aid in purchasing coverage, the “plan” (i.e., cash) effectively has a cap on dollar limits.
The arrangement could also cause fewer workers to enroll in the company’s plan.
2. Offer a cash or coverage choice
Second no-no from the feds: Employers can’t approach an employee who is a high claims risk and offer that person an option of accepting cash (presumably to
buy coverage in the individual market) – instead of enrolling in the company plan.
Reason: The DOL says this amounts to discrimination. Individuals with health problems would be receiving a benefit unavailable to workers without health problems.
This was a strategy some employers had taken to get unhealthy individuals off of their plans.