Important Affordable Care Act reform you probably don’t know you should be Implementing

A recent health reforms resulting from the provisions of the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148 prevent most freestanding health reimbursement arrangements. We know this is a lot of jargon, so we have tried to simplify the wordy provisions below and remove most of the legal language.


What is a free standing health reimbursement plan and do you have one?

A freestanding plan can be called a few names (cafeteria plans, employer payment plans, premium only plans…), but if your organization is reimbursing you for your health insurance, odds are you are under one of these plans that are no longer acceptable under the affordable care act.


What are the consequences of not changing a plan that is non-compliant?

Non-compliant health arrangements are subject to a $100-per-day excise tax per employee under Sec. 4980D. I am sure you are thinking “that’s steep!!!”. It is very steep.


What can you do about this?

If you only have one employee on the plan

If there is only one person on the plan, section 9831 carves out an exception. If an arrangement only benefits a single employee the market reforms will not apply. Notice 2015-17 states that this plan can cover multiple individuals (such as your family). Note: those allowed on the plan are limited to your spouse and dependents.


If you have more than one employee on the plan

You should immediately take action to change your health plan at your organization. Acceptable plans can vary dramatically, but essentially a plan that is not reimbursable would not be subject to these limitations discussed above.

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