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Regulators Warn Against Employer Reimbursement Of Health Insurance Premiums

employer reimbursement of health insurance premiumsIn an article by Robert MANDELBAUM in the (Nov 18th, 2014), he states regulators are squeezing employers even further by disallowing stipends to buy insurance among other limitations. The law and associated rule-making is making what many consider a convoluted set of laws/rules even murkier. Read the article and see if you see a rainbow through the storm clouds?


(CFO) |


I know of at least one enterprising agency that took the tact of providing $1,500/month pretax via a Sec 125 (cafeteria) plan for each employee to use for benefits as they chose. Most of those benefits are available from the employer at their cost. But, for healthcare, they are to go to our state exchange and obtain coverage. (That will be more than $1,500/mo for many!)

The agency did this to control their employee benefits costs. They are now "fixed" at a specific amount that the employer believes makes them competitive in the employment marketplace without the risk of ever inflating health care costs. Any decision to offer more would still involve a fixed amount of increase in pre-tax funding that could be planned for and factored into future costs without having to wait with baited breath each year during open enrollment to find out how bad things were going to get.

But, it sounds as though the DOL is saying they can't do this. Wouldn't that eliminate all Sec 125 plans that have health care as one component?

I've maintained all along that, one of the few benefits that the ACA would provide is to drive health care costs back to the end users outside of an employer "benefit". That might seem scary at first, given the enormous costs that most employees have no concept of. But, it brings in fairness and the role of the marketplace in setting costs rather than some benevolent, not-out-of-my-pocket scheme that prevents market realities from focusing consumer choices in health care to where they are the most efficient and beneficial on an over arching scale rather than how the pretend "no cost" world we've been living in for too long.

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