Employers should think twice before cutting workers or retirees a check and shipping them off to use the exchanges.
The Employee Benefits Security Administration, an arm of the U.S. Department of Labor, has told employers and their brokers just that in a new technical release.
In the release, EBSA officials explain how they believe the Patient Protection and Affordable Care Act applies to health reimbursement arrangements, health flexible spending arrangements and other benefits programs.
Next year, PPACA prohibits employer-paid plans from imposing annual or lifetime benefits limits.
If an employer tried to use either a stand-alone HRA or any other mechanism to give each worker a fixed amount of cash the worker could use to buy individual coverage, that would violate the PPACA ban on annual benefits limits, officials write in the new technical release.
The stand-alone HRA group health plan would have to offer the mandated preventive services benefits package without imposing cost-sharing requirements on the workers, even if the workers used their HRA money to buy similar individual policies.
An employer could use a standalone HRA to provide fixed amounts of cash that early retirees could use to buy coverage, but they would be ineligible for subsidies, officials said.
EBSA says the other agencies implementing PPACA -- the Internal Revenue Service and the U.S. Department of Health and Human Services -- will be releasing similar guidance.