Monday, December 1, 2014

Feds say you can't force high-cost employees onto Health Care Exchange

Do you have an employee with a high-cost medical condition? For example, an employee with hemophilia could incur hundreds of thousands or dollars or more in medical costs per year. That one employee could be catastrophic for the overall cost of your company’s group health plan. As a result, many employers are taking advantage of Obamacare’s health-care exchanges by paying these employees to secure their own private medical insurance.

This practice, however, may be changing, and it’s not for the better. According to TLNT, the Departments of Labor, Health and Human Services, and the Treasury have jointly warned employers not to dump high-cost employees from group health plans:

As employers try to minimize expenses under the health law, the Obama Administration has warned them against paying high-cost workers to leave the company medical plan and buy coverage elsewhere. Such a move would unlawfully discriminate against employees based on their health status….

The Affordable Care Act requires exchange plans to accept all applicants at pre-established prices, regardless of existing illness. Because most large employers are self-insured, moving even one high-cost worker out of the company plan could save a company hundreds of thousands of dollars a year. That’s far more than the $10,000 or so it might give an employee to pay for an exchange plan’s premiums….

The Affordable Care Act itself doesn’t block companies from paying sick workers to find coverage elsewhere…. But other laws do, including the Health Insurance Portability and Accountability Act and the Public Health Service Act, according to three federal agencies. Specifically, paying a sick worker to leave the company plan violates those statutes’ restrictions on discriminating against employees based on medical status, the departments said in their bulletin.

I understand how dropping an ill employee from health coverage because of a medical condition would violate a variety of laws, including the ADA. But, in these cases, employers are not “dropping” employees. Instead, they are merely shifting coverage from an employer-sponsored plan to a government-sponsored plan. The cost to the employee, and the coverage available to the employee, should not change. If the cost and coverage does not change, this practice should not violate any laws.

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