You Can’t Reimburse for Individual Health Insurance, But You Can Help Pay For It
As health insurance rates continue to rise, many employers are looking for options when it comes to reducing costs associated with offering health insurance. Some employers are dropping their group plans in favor of sending employees to the individual market to buy their own health insurance. But these employers aren’t just looking for a way out of providing financial assistance to their employees for health insurance; they still want to help.
In theory it sounds like it should be simple and straightforward: Let employees shop for and buy a plan, then reimburse them for a portion of their premiums each month, creating very little, if any, hassle on your part. By law, though, it’s not that easy. If you pay for or reimburse an employee’s premiums for health insurance coverage purchased in the individual market (whether it’s pre-tax or post-tax) and/or you require a receipt of purchase in order for them to receive that money, you’re creating an employer payment plan (like a group plan). By inadvertently creating an employer payment plan, you will violate one or more of the ACA reform requirements. When you create a plan like this, you’re not in compliance with the ACA.
According to the IRS’ guidance, the arrangement you’re creating violates the ACA’s prohibition on annual dollar limits, as well as the requirement to provide first-dollar coverage for preventive services, because they cannot be integrated with any individual health insurance plan.
But there’s another way to help.
There is a way to help employees pay for their individual health insurance – and reduce or eliminate all the hassle you face when administering their plans. Employers can offer employees additional compensation that can be used to purchase health insurance coverage from the individual market. This is different from reimbursement because you’re giving post-tax compensation that isn’t required to be used on health insurance and isn’t contingent on whether or not the employee buys health insurance.
When employees move to the individual market, they have more choice and you can help them afford the insurance. You don’t reimburse employees; you provide additional compensation they can use to buy health insurance.
Gravie can help your employees in the individual market, and do it so you’re compliant with the ACA. How? You choose a certain amount you’d like to give each employee (and that amount can be different for different employees), and employees go to Gravie to buy an individual plan that best fits their needs and budget. They do all of this with the help of Gravie advisors—unbiased, expert advisors whose number one priority is making your employees happy.
When it comes time to pay for their plan each month, the amount of compensation you’re providing is applied directly to the cost of the employee’s plan so that they only need to pay the balance out of their bank account each month. You get a simple invoice each month and your employees get the financial help they need.
The best part is that Gravie’s customers have saved, on average, 36% on costs associated with health insurance.* Plus, 86% of employees would recommend Gravie to their friends or family members.