On May 19, 2014, the IRS reiterated its stance against an employer’s reimbursement of individual premiums by publishing a short FAQ. Question 1 of the FAQ reads as follows: Q1. What are the consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the Marketplace or outside the Marketplace)? In its response, the IRS referred back to Notice 2013-54 and emphasized its position that these types of employer payment plans are considered group health plans under Health Care Reform. As a result, such arrangements violate Health Care Reform’s prohibition against annual dollar limits, as well as the requirement to provide first-dollar coverage for preventive services. In addition to the Health Care Reform requirements, such an arrangement would also be subject to ERISA, COBRA and other federal requirements for all group health plans. Most importantly, the recent IRS guidance referred to the potential consequences of implementing employer payment plans to reimburse employees for the cost of individual health insurance policies. Such a penalty can be up to $100 per day per applicable employee. The IRS went on to point out that such a penalty could total $36,500 per year per employee. Employers could also face additional liability in the form penalties from any enforcement by the Department of Labor for violation of market reforms such as the violation of the prohibition of annual limits or first dollar coverage of preventive care.
Important Keystone Proactive Plan RX Update: Keystone has done a poor job of communicating that the Proactive plans have a ‘new preferred pharmacy network’ that does NOT include Rite Aid or Walgreens. If you currently use a Rite Aid or Walgreens, most prescriptions can be transferred so that you will not need to obtain a new RX. The new pharmacy you select can contact Rite Aid or Walgreens to complete the transfer if you provide them with the RX label. Please feel free to contact us if you have any questions.