H&W ACA and the Reimbursement of Individual Policy Premiums
The IRS recently issued a series of information letters (Letter 2016-0023; Letter 2016-0005; Letter 2016-0021; Letter 2016-0019) discussing arrangements in which employers reimburse employees for the cost of individual health insurance policies. These letters broke no new ground in reasserting that these types of arrangements are considered group health plans subject to the ACA and that they fail to comply with the ACA’s prohibition on annual limits on essential health benefits.
Of greater interest to staff at Compliancedashboard was the mention in passing of products marketed by some promoters that allege that use of the product will permit employers to reimburse health policy premiums without violating the ACA’s market reforms. The IRS did not mention any particular product or arrangement, but did state that “we have been made aware of a number of these schemes, and in looking at the information we have been presented we disagree with the promoters’ claims that their product does not impose an annual limit on essential health benefits. Consequently, their product fails to meet the market reforms.” IRS Information Letter 2016-0019.
