Since the roll out of the Affordable Care Act (ACA), often called Obamacare, there has been plenty of confusion and frustration on the part of small businesses. Perhaps one of the more frustrating aspects of the law has been a rule written by the IRS that eliminates an employer’s ability to reimburse employees for health insurance purchased on the individual marketplace (even though this rule is not written into the ACA).
In mid-2015 the IRS announced it would begin enforcing violations of this law with a crippling penalty of up to $100 per employee, per day, with a maximum fine of $36,500 a year.
Since group health insurance plans are expensive to administer, this has left many small businesses that used to provide employee premium reimbursements reeling. Fortunately there are ways to work around these limitations, but the details can be a little technical, so it is generally best to work with a knowledgeable health insurance broker.
The Health Insurance Marketplace
Individuals without employer-provided group health insurance can now go online to the health insurance marketplace to shop private health insurance plans. These plans vary in terms of the total monthly premiums, the deductibles, and other out-of-pocket costs, but all of them will meet the minimum requirements under the Affordable Care Act.
The Market Reforms
Obamacare grew out of a desire to reform the health insurance market to make it more of a “level playing field” for all consumers. The end result is the creation of Market Reforms that include a variety of protections, examples of which include:
- No annual limits on things like pharmacy benefits, physician and hospital care
- Coverage for adult children on a parent’s plan up to the age of 26
- More transparency and fairness in premium pricing
- Minimum coverage requirements for all plans (the 10 essential benefits)
- A Patient’s Bill of Rights to provide coverage to people with pre-existing conditions, end lifetime limits on coverage, and allow more choice of doctors
- Preventive services covered 100 percent
- Student Health Plans for young adults for whom family coverage is not available
- Full compliance with Section 105 means compliance with these Market Reforms as well as meeting other eligibility requirements.
Where the Broker Comes In
Providing health insurance benefits is a huge draw for employees and can help you recruit and retain the best talent at your business, but group plans are often expensive and difficult to administer. A broker can help you figure out whether you are able to set up a specific type of plan—called a Premium Reimbursement Arrangement, or a Health Reimbursement Plan (HRP) under Section 105—that complies with all ACA Market Reforms, group health plan rules, and federal regulations like PHS Act Section 2711 and Section 2713, ERISA, and COBRA.
What limitations do you have, when it comes to benefits administration, that a broker might be able to help with? Tell us about it in the comments below.