Source: https://www.zanebenefits.com/blog/can-employees-access-a-health-reimbursement-plan-and-federal-subsidies
Timestamp: 2018-02-20 00:06:39
Document Index: 58594886

Matched Legal Cases: ['§ 36', '§ 5000', '§ 5000', '§1', '§ 300', '§ 5000']

Can Employees Access a Health Reimbursement Plan and Federal Subsidies?
Under the Affordable Care Act (“Obamacare”), health insurance tax subsidies are available to the majority of individuals and families who do not receive insurance through an employer. If an employer offers a minimum level of coverage, employees are disqualified from the subsidies.
So, what about employees who are offered a Section 105 Health Reimbursement Plan (HRP)? Are participants in an HRP also disqualified from the subsidies? This article provides an overview of how the federal health insurance subsidies work in tandem with an HRP.
How an Employer’s Health Plan Impacts Eligibility for Subsidies
If an employee has an offer of health coverage from an employer whose plan meets certain standards (i.e. it is an “eligible employer-sponsored plan”), the employee is not eligible to receive a federal subsidy - even if the employee does not enroll in coverage.
However, if the employer’s health plan offered does not meet these standards, the employee is not disqualified from accessing the subsidies.
Related - Am I Eligible for Premium Tax Credits?
Let’s examine this closer.
Internal Revenue Code § 36B provides that individuals are allowed access to the health insurance subsidies as long as they are not eligible for other minimum essential coverage. This includes coverage under an eligible employer-sponsored plan that is also affordable to the employee and provides minimum value.
Under these guidelines, an individual is not considered to be offered minimum essential coverage if any one of the following circumstances apply:
The employer-sponsored plan does not qualify as an “eligible employer-sponsored plan,” or
The coverage provided is not affordable, or
The coverage does not provide minimum value.
When discussing an HRP, individuals are allowed access to premium tax credits because an HRP is not an “eligible employer-sponsored plan.”
An eligible employer-sponsored plan, as defined by IRC § 5000A, is a governmental plan, or any other plan or coverage offered in the small or large group market (“group health insurance”).
IRC § 5000A(f)(2)
Eligible employer-sponsored plan
A Section 105 Health Reimbursement Plan (HRP), such as ZaneHealth, is not a governmental plan and does not provide coverage offered in the small or large group market within a state. As a result, an HRP is not an eligible employer-sponsored plan and does not qualify as minimum essential coverage.
For this reason, HRP participants - if otherwise eligible - are allowed access to the federal health insurance subsidies.
Read an example of how to pair health insurance subsidies and a reimbursement plan.
I don't understand how the HRP (ZaneHealth) "does not provide coverage offered in the small or large group market within a state". It's coverage. It's offered. And I would think that any health plan for businesses would be for "a small or large group market". Zane's HRP seems to be a specialized HRA. Isn't an HRA usually considered a self-insured plan? A self-insured plan is part of the definition of "eligible employer-sponsored plan" for Minimum Essential Coverage at §1.5000A-2(c).
Hi Bill, Great comments - Coverage offered in a state’s Large or Small Group Market refers to health insurance sponsored by either a Large or Small Employer. See definitions in § 300gg-91. The HRP is not providing coverage in these markets. Rather, the HRP provides reimbursement for qualified expenses, including premiums paid for health insurance coverage and basic preventive care as required by PHSA Section 2713.. Although certain self-insured plans may qualify as an eligible employer sponsored-plan - comments in the regulations (78 FR 53655) identify an absence of guidance surrounding arrangements in which an employer provides funds for employees to obtain coverage under a plan offered in the individual market. As indicated by the comments, it is anticipated that future guidance will address these arrangements in relation to 5000A. In the meantime - the HRP is not an eligible employer-sponsored plan. On the other hand - let’s say this position is incorrect and it is later determined that the HRP is, in fact, Minimum Essential Coverage (MEC). This is not necessarily a bad thing for employees or employers. What will this mean for employees and employers? The obvious downside would be employees being restricted from accessing the premium tax credits if they choose to participate in the HRP (i.e. employees would need to choose between the tax credit and the employer contribution). However, it would also result in the HRP satisfying the Employer Mandate and the Individual Mandate. This would be great for the business, and the employees, but the effect is clearly not the intent of the Affordable Care Act. As you can see, the HRP is not an eligible employer-sponsored plan, or MEC, based on the original text of the law (§ 5000A) or the commentary in the regulations. It also not the intent of the Affordable Care Act to consider HRP-like plans MEC. That being said, if the law were to change to make the HRP an eligible employer-sponsored plan, employers and employees would gain some advantages with respects to the employer and individual mandates. Was this helpful? I would be happy to connect if you would like to discuss further.
If an employer (either those who are subject to the employer mandate and those who are not) offers an employee employer-sponsored health insurance, and that coverage cost to the employee is affordable (under 9.5% of household income) and provides MEC and if this rule applies only to self-only coverage (not dependent children, nor spouse), are the dependent children and spouse disqualified from obtaining premium tax-credits, even if their household income would otherwise qualify them for tax credits? If so, it would seem the employer would be doing an unintentional disservice to their employees by offering them coverage (assuming the employees income qualifies them for APTCs).
Hi Keith, Yes - if the employer-sponsored health plans meets the criteria you outlined, then the dependent children and spouse are disqualified from premium tax credits, even if the family coverage is "unaffordable." The definition of affordability is based only on single/self-only coverage. See also: http://www.zanebenefits.com/blog/bid/288577/ACA-Limits-Premium-Subsidies-For-Families-of-Covered-Employees Hope that helps, Christina
What if the employer is NOT subject to the Employer Mandate, (under 50 employees); does simply offering group health insurance to an employee deem the employee's spouse and dependents disqualified from availing of APTCs even if their income would otherwise qualify them for APTCs?
Hi Keith, In regards to qualification for the premium tax credits, the size of the employer (ex: under 50 employees) does not come into consideration. If a small employer (under 50 employees) offers group health insurance to employee and dependents, and the single coverage premium is considered affordable to the employee, then yes - employee/spouse/dependents are all disqualified from premium tax credits. Does that make sense? Christina