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What the Department of Labor Ruling Means To You

Hi, I’m Calli Halgren from Health eDeals.  Today I’m interviewing Jan Dabauskas, General Counsel and Chief Legal Officer for the fully insured division of IHC.  Jan’s going to answer some of our pressing questions about the FAQ that the Department of Labor released on Nov. 6th of this year, and how it affects employers ending their employer-based coverage and letting their employees purchase qualified individual ACA plans.  Jan, can you summarize the ruling for us?

Jan: Sure. The FAQ goes into the issue of pre-tax and post-tax dollars that an employer can contribute to an individual plan and the FAQ states that an employer cannot contribute either pre-tax or post-tax dollars toward an individual plan.

C: Does this DOL ruling mean the end of employers ending their group coverage and letting their employees opt for individual plans?

J: No, not at all.  What this means is that we now have the opportunity to fully understand what the requirements are.  So, simply, the requirements are, you cannot contribute pre-tax or post-tax dollars toward an individual major medical plan.  However, we do have the opportunity for employers to increase compensation, to offer bonuses to employees and then allow employees to make the choice to purchase their individual major medical plan.  Now remember, everyone has an individual mandate to purchase something so let’s take those valuable benefits and make sure the employee is still receiving the compensation for them and that they have the opportunity to purchase a plan.  An employer cannot require the plan be purchase, but you can make it available to the employee through this means.

C: Since they can’t contribute post-tax money for individual medical coverage, can they run the contribution through Section 105 or somehow use an HRA?

J: You know, that’s a question that the Department is discouraging, unfortunately.  What I would advise is if the employer really wants to contribute in that way would be to consult a tax advisor and proceed after that.

C: If an employer offers a group medical plan and doesn’t contribute to dependent premiums, can dependents still qualify for a subsidy?

J: Perhaps. It depends on whether the plan is qualified and affordable. If it is, then unfortunately, no, the dependents will not qualify for a subsidy.  However, if the plan is not qualified and if it’s not affordable, then yes, the dependent would qualify for a subsidy on the Exchange.

C: Thanks for joining us today, Jan.  And remember, call the number on the screen if you have any questions regarding your group’s health coverage.