In a series of notices and FAQs, the IRS has clearly enunciated its view that an employer’s reimbursement of an employee’s premiums for individual health insurance violates certain provisions of the Affordable Care Act (“ACA”). While reiterating this key point, Notice 2015-17 does grant a limited period of relief for smaller employers. Nonetheless, even those employers should be working toward a June 30 deadline to comply with these ACA constraints.
Group Health Plans
In the years since the 2010 enactment of the Affordable Care Act (“ACA”), the agencies charged with enforcing the ACA have worried that certain responses to the law’s requirements could negatively affect the overall health insurance system. For instance, because the ACA requires insurers to issue individual health insurance coverage without regard to health status, sponsors of self-funded employer plans may be tempted to shift their high-risk employees into the individual market. But by leaving only healthier employees in the self-funded plans, this approach could result in “adverse selection” – leading to an erosion of the individual insurance market.
The HIPAA Electronic Transactions and Code Sets rule requires most group health plans to obtain new health plan identifier numbers (HPIDs) by November 5, 2014. While insurers will likely obtain the HPID on behalf of fully insured plans, the task of obtaining the HPID for a self-funded plan will fall upon the plan sponsor. While the process is relatively simple, plan sponsors should begin identifying which group health plan arrangements are subject to the HPID requirement and communicating with plan vendors regarding the requirements.