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Agents Group Seeking Answer to Employer Premium Question

AG to give Opinion on Employer Premium Option

Austin,Texas (PR MediaRelease) August 17, 2017

Agents Group Seeking Answer
To Employer Premium Question

A new federal law may provide opportunities for Texas workers to have their individual health benefit plan paid for by their employer, a practice that is currently not legal.

Employers have known for a long time that one of the great ways to attract and keep good employees is by providing them a good health benefit plan. For decades employers have done this with a group plan.

Some employers began looking for alternate ways to provide this valuable employee “perk” that would be less costly. One idea — let employees buy their own individual plan and reimburse them for the premium. This caught a lot of attention, however it went against federal and state laws, which prohibit employers from doing so.

This has been a point of discussion and dispute in Texas for several years. The Texas Association of Health Underwriters (TAHU) is working with State Senator Charles Perry to help settle this dispute. They have asked for the Texas Attorney General’s opinion regarding the conflict between Texas law and the new federal 21st Century Cures Act that was passed late last year. The 21st Century Cures Act would allow employers to pay for employees’ individual plans, in certain circumstances.

“Depending on the opinion of the Attorney General, we may be opening the doors which allow more Texas employers who cannot afford traditional group insurance plans help their employees to purchase their own individual health benefit plans, and permit premiums to be paid by employers” said Mike Avery of Odessa, president of TAHU – A statewide association of professional benefits experts.

“People need more access to buy a comprehensive health plan, and the new federal law may provide that access” Avery added. “Now we just need to know if the Attorney General says it is legal or not.”

Because of the language in Texas insurance laws, state regulators have long held that an employer could not make tax-deductible premium payments for employees who wanted to buy their own private insurance plan. Instead, most employers provided a group health plan to pay for employees’ medical costs.

The differences between individual and group health plans were significant before ACA. Group benefit plans offered guarantees to employees that were not available with individual plans. The tradeoff for a long time was also cost. Individual plans, were often less expensive than employer group plans, because of the rigorous underwriting and reduced benefits.

One guarantee that gave group plans an advantage was having to provide coverage regardless of any adverse health history among employees. Whereas, individual plans were medically underwritten and coverage was only offered after “underwriting” the person’s medical history.

Insurance regulators cited state law and declared that employers could not use a tax-deductible program to pay the premium for workers’ individual plans. The federal government also said the practice was a no-no and promised employers they would be hit with big penalties if they used this funding method.

Regardless of this interpretation, there was still a strong school of opinion that certain premium payment plans ought to be permitted, especially after the Affordable Care Act was passed in 2010.

Late last year Congress passed the 21st Century Cures Act, which exempted some employers from the federal prohibitions, setting up the conflict between state and federal law.

TAHU president Avery stressed that even if the Attorney General gives the green light to this new way to pay for employees’ plans, it may not be a fit for everyone.

“Congress gave us specific guidelines on which employers could take advantage of this new exemption, and under what circumstances” he added. “There’s no question that a group health plan is still the best way for an employer to provide benefits to their employees in many situations”, Avery continued.

Avery noted, the devil’s in the details.

“Knowing these details and working with employers to find the best plan to provide what their employees need is what TAHU members do every day, all day long. We know employee benefits and we know health insurance. Employers would be well advised to contact a licensed professional agent and member of the TAHU to find out if this new opportunity is good for them.” www.TAHU.org

The Texas Association of Health Underwriters (TAHU) is a statewide membership association representing licensed health insurance agents, brokers, consultants and benefit professionals who serve the health insurance needs of employers and individual consumers seeking health insurance. TAHU is a state affiliate of the National Association of Health Underwriters.

The Texas Association of Health Underwriters (TAHU) is a statewide membership association representing licensed health insurance agents, brokers, consultants and benefit professionals who serve the health insurance needs of employers and individual consumers seeking health insurance. TAHU is a state affiliate of the National Association of Health Underwriters.
The Texas Association of Health Underwriters (TAHU) is a statewide membership association representing licensed health insurance agents, brokers, consultants and benefit professionals who serve the health insurance needs of employers and individual consumers seeking health insurance. TAHU is a state affiliate of the National Association of Health Underwriters.

The Texas Association of Health Underwriters (TAHU) is a statewide membership association representing licensed health insurance agents, brokers, consultants and benefit professionals who serve the health insurance needs of employers and individual consumers seeking health insurance. TAHU is a state affiliate of the National Association of Health Underwriters.

Melissa Perryman


512.918.9095
melissap@perrymaninsurance.com

 
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