A common question from employers setting up a formal Premium Reimbursement Plan is, “Does the Premium Reimbursement Plan need to cover all ten essential health benefits?” The answer? Read on.
What Do You Mean, Premium Reimbursement?
Premium Reimbursement Plans are experiencing widespread adoption because they allow employers to offer affordable health benefits and utilize the new advantages of individual health insurance.
When an employer sets up a Premium Reimbursement Plan they have two core options: 1) a tax-preferred Premium Reimbursement Plan (also called a Healthcare Reimbursement Plan or HRP) or 2) a taxable stipend (giving employees a taxable raise for health insurance).
In this article, we are discussing a tax-preferred Premium Reimbursement Plan, as it is the type of plan most employers (and employees) prefer.
What are Essential Health Benefits?
The Affordable Care Act requires that health plans offered in the individual and small group markets, both inside and outside of Health Insurance Marketplaces, offer a core package of ten items and services, known as "essential health benefits."
Does a Premium Reimbursement Plan Need to Cover All of the Essential Health Benefits?
No. A Premium Reimbursement Plan does not need to cover all ten essential health benefits.
Why? The requirement to cover all essential health benefits applies to “health plans offered in the individual and small group market.” A Premium Reimbursement Plan does not meet this definition. It’s as simple as that. (Remember, a Premium Reimbursement Plan is not health insurance; it’s a medical reimbursement plan.)
As we wrote about previously, however, a Premium Reimbursement Plan does need to cover one of the essential health benefits - preventive care. This is to comply with the PHS Act 2713.
Read more about this requirement: Preventive Care and Employer Reimbursement of Health Insurance.
Does a tax-advantaged Premium Reimbursement Plan need to cover all ten essential health benefits? No. However, the plan does need to cover one of the essential health benefits - preventive care - and meet other requirements of the Affordable Care Act’s Market Reforms.
What questions do you have about Premium Reimbursement and essential health benefits? Leave a comment and we’ll help answer them.