Employer Penalty for Sending Employees to Exchange

[somarco]

Many employers had thought they could shift health costs to the government by sending their employees to a health insurance exchange with a tax-free contribution of cash to help pay premiums, but the Obama administration has squelched the idea in a new ruling. Such arrangements do not satisfy the health care law, the administration said, and employers may be subject to a tax penalty of $100 a day — or $36,500 a year — for each employee who goes into the individual marketplace.

http://www.nytimes.com/2014/05/26/u...mping-workers-into-health-exchanges.html?_r=0

 

[AllenChicago]

I have 3 micro-employers (<5 employees) where the employee takes their bill to the employer, who writes a check for each premium and mails them to the health insurers. Been doing this for years. Now this is illegal?
ac

 

[somarco]

The above appears to apply to employers (50+) who drop their plan.

 

[kgmom219]

@Allen....did the app not ask "is your employer paying for this policy?"

Maybe its a Texas thing, but that's always been illegal. Regardless of group size. If your employer wants to pay for it, they need to give you a raise. Not pay the premium.

My two groups who went this route gave everyone a raise based on current group premiums. Most of the employees came out ahead due to their subsidy amount.

 

[leevena]

Applies to large group only.

Not familiar with texas law, but many, if not all states, do bar employers from making these payments. Problem is that the states never enforce it, so the practice continues.

 

[kgmom219]

Applies to large group only.

Not familiar with texas law, but many, if not all states, do bar employers from making these payments. Problem is that the states never enforce it, so the practice continues.

For Texas Aetna and BCBS, it was a question on the pre-ACA apps. If you answered "yes", it kicked you out.

I punted on this question from employers and said "I think the answer is no, but you need to confirm with your CPA". Both groups were less than 50 ee's and both CPA's said "don't do it!"

 

[leevena]

Thanks for the clarification. Guess states/carriers may start changing their ways. Have a good holiday.

 

[Happy Texan]

IRS Notice 2013-54 states that this ruling applies to employers who do not set up a health insurance plan for its employees. I assume it also applies to employers who do set up group plans, but pay for individual policies.
The ruling applies to after tax payments, "applied toward health insurance coverage, or amounts paid in cash compensation."
Any idea how this ruling may affect the private exchanges?
Are those plans considered individual policies?
Don Levit

 

[ctg]

From a May 7 Kaiser article:

"Can corporations shift workers with high medical costs from the company health plan into online insurance exchanges created by the Affordable Care Act? Some employers are considering it, say benefits consultants."

Employers Eye Moving Sickest Workers To Insurance Exchanges - Kaiser Health News

 

[Agentinjax]

Many employers had thought they could shift health costs to the government by sending their employees to a health insurance exchange with a tax-free contribution of cash to help pay premiums, but the Obama administration has squelched the idea in a new ruling. Such arrangements do not satisfy the health care law, the administration said, and employers may be subject to a tax penalty of $100 a day — or $36,500 a year — for each employee who goes into the individual marketplace. http://www.nytimes.com/2014/05/26/us/irs-bars-employers-from-dumping-workers-into-health-exchanges.html?_r=0

So, when I read this, if appears to be addressing the larger companies? Or did I miss something, does this ruling impact the smaller companies as well 4-50 employees or so?