Page 1 of 1

Many employers originally thought they could shift health costs to the government by sending their employees to a health insurance Exchange/Marketplace with a tax-free contribution of cash to help pay premiums, but the Obama administration has squashed this idea in a new ruling. Such arrangements do not satisfy requirements under the Affordable Care Act (ACA), the Obama administration said, and employers could now be subject to a tax penalty of $100 a day — or $36,500 a year — for each employee who goes into the individual Marketplace/Exchange for health coverage.

 

The ruling this month, by the Internal Revenue Service, prevents any “dumping” of employees into the exchanges by employers.

 

Under a main provision in the health care law, employers with 50 or more employees are required to offer health coverage to full-time workers, or else the employer may be subject to penalties.

 

Many employers had concluded that it would be cheaper to provide each employee with a lump sum of money to buy insurance on an exchange, instead of providing employer-sponsored health coverage directly to employees as they had in the past.

 

But the Obama administration has now raised objections in an authoritative Q&A document recently released by the IRS, in consultation with other agencies.

 

The health law, known as the Affordable Care Act (ACA), was intended to build on the current system of employer-based health insurance. The administration wants employers to continue to provide coverage to workers and their families and do not see the introduction of ACA as an eventual erosion of employer provided coverage.

 

Employer contributions to sponsored health coverage, which averages more than $5,000 a year per employee, are not counted as taxable income to workers. But the IRS has said employers could not meet their obligations under ACA by simply reimbursing employees for some or all of their premium costs from the marketplace/exchange.

 

Christopher E. Condeluci, a former tax and benefits counsel to the Senate Finance Committee, said the recent IRS ruling was significant because it made clear that “an employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange.”

 

If an employer wants to help employees buy insurance on their own, Condeluci said, they can give the employee higher pay, in the form of taxable wages. But in such cases, he said, the employer and the employee would owe payroll taxes on those wages, and the change could be viewed by workers as reducing a valuable benefit.

 

A tax partner from a large accounting firm has also said the ruling could disrupt reimbursement arrangements used in many industries.

 

For decades, many employers have been assisting employees by reimbursing them for health insurance premiums and out-of-pocket costs associated with their health coverage. The new federal ruling eliminates many of those arrangements, commonly known as Health Reimbursement Arrangements (HRAs) or employer payment plans, by imposing an unusually punitive penalty. The IRS has said that these employer payment plans are considered to be group health plans, but they do not satisfy requirements of the Affordable Care Act for health coverage.

 

Under the law, insurers may not impose annual limits on the dollar amount of benefits for any individual, and they must provide certain preventive services, like mammograms and colon cancer screenings, without co-payments or other charges.

But the administration has said that employer payment plans or HRAs do not meet these requirements.

 

This ruling was released as the Obama administration rushed to provide guidance to employers and insurers who are beginning to review coverage options for 2015.

 

The Department of Health and Human Services said it would provide financial assistance to certain insurers that experience unexpected financial losses this year. Administration officials hope the payments will stabilize medical premiums and prevent rate increases that are associated with the required policy changes as a result of ACA.

 

Republicans want to block these payments, however, as they see them as a bailout for insurance companies who originally supported the president’s health care law.

 

Stay tuned for more updates on ACA as they are released. Should you have any questions, please do not hesitate to contact our office. 

UHC Fitness Reimbursement Program

December 04 - Posted at 3:02 PM Tagged: , , ,

UnitedHealthcare is launching a new Fitness Reimbursement Program for members starting January 1, 2013.

 

The Fitness Reimbursement program offers money back for members who go to the gym on a regular basis. Here is how the program works:

 

    • Choose a participating fitness center from UHC’s network including facilities such as 24 Hour Fitness, Anytime Fitness, Blink Fitness, Curves, Life Time Fitness, Gold’s Gym, Snap Fitness, the Y and many independent locations.

 

    • Present your fitness ID card each time you visit the fitness center

 

    • Get reimbursed $20/mth (up to an annual max of $240) for every month you visit the fitness center at least 12 times. The reimbursement will be deposited directly into your bank account or credited to your fitness center membership dues, depending on the fitness center you select.

 

    • The program is available to covered employees and covered spouses enrolled in a UHC medical policy.

 

Please contact our office for a copy of the UHC flyer to distribute to employees to help promote the new program.

© 2024 Administrators Advisory Group, Inc. All Rights Reserved