For the Third Time DOL & IRS say an Employer Can NOT reimburse employees for individual health insurance plans

California Health InsuranceCalifornia Health Insurance Blog(SHOP) Covered California Small Business ArticlesFor the Third Time DOL & IRS say an Employer Can NOT reimburse employees for individual health insurance plans

For the Third Time DOL & IRS say an Employer Can NOT reimburse employees for individual health insurance plans

Today the U.S. Department of Labor released yet another notice/guidance/ “FAQ” instructing employers that “an employer health care arrangement cannot be integrated with individual market policies to satisfy the market reforms.”  Obstinate vendors continue to push their high cost TPA services and claim that an employer can cancel a group health plan and replace it with a Section 105 HRA reimbursement arrangement.  They cannot.  Hopefully these vendors will read this FAQ and finally get the message.

Today’s FAQ by the DOL is the third time DOL, IRS and HHS have written to inform everyone that a reimbursement arrangement using individual health insurance plans is illegal and employers who use these arrangements can face large penalties.

As the IRS said in its updated guidance today: “DOL has issued a notice in substantially identical form to Notice 2013-54, DOL Technical Release 2013-03. On Jan. 24, 2013, DOL and HHS issued FAQs that address the application of the Affordable Care Act to HRAs. On Nov. 6, 2014, DOL issued additional FAQs that address the application of the Affordable Care Act to HRAs and other payment arrangements.”

The message should be clear to employers: you cannot cancel your group plan and reimburse employees who purchase individual health insurance plans.