The Affordable Care Act was implemented to ensure that every American has access to and obtains health care coverage. Failure to comply with the new law can result in severe fines and penalties. However, mandating coverage also increased the financial burden for many companies.

As a result, a number of organizations had begun offering financial incentives for workers – particularly those with medical conditions considered to be high-cost – to voluntarily opt-out of coverage offered by their companies and instead secure health insurance on their own, usually through a government sponsored exchange program. However, the Department of Labor, in collaboration with the Treasury and the Department of Health and Human Services, changed language in the ACA expressively forbidding this practice on the part of employers.

According to TLNT, a move like this, while not violating the terms of the ACA, does fall outside of guidelines established under the Public Health Service Act and the Health Insurance Portability and Accountability Act.  

"If you were to cherry-pick your high-cost individuals and offer them money to send them over to the exchange … this would be a violation of HIPAA," Amy Gordon, a benefits attorney with the McDermott Will and Emory law firm, told TLNT.

Understanding the new ACA rules
Although the Affordable Care Act remains largely unchanged, as it relates to employers who were offering financial incentives to employees to forego enrolling in a health benefits plan, two major modifications to the law will affect these organizations.

In the Frequently Asked Questions section of the Department of Labor ACA page, businesses can no longer approach workers with high-risk medical conditions and give them the option of enrolling in company-sponsored coverage or taking cash payments to secure health insurance on their own. This is seen as an attempt to lower the cost of premiums that organizations offering worker health care benefits have to pay, as well as overt discrimination because reasonably healthy workers were not given the same choice. 

Additionally, cash payouts like these violate ACA rules and regulations, such as the pre-established dollar limits on coverage as well as the fact this kind of deal can't be effectively integrated into the company's coverage policy. Doing this creates a health plan unto itself, which also includes a cap because companies will essentially limit the amount of cash given to workers who elect to take this option.

TLNT stated that one high-cost worker who voluntarily waives health insurance options provided by an employer, saves the company hundreds of thousands of dollars annually. This violates the general premise of the ACA.

Companies who were engaged in this practice need to familiarize themselves with the changes instituted by the Department of Labor, as will any employer of record. Failure to do so essentially constitutes breaking the law and could result in severe fines and penalties. The DOL website offers a comprehensive look at these changes to help companies have a clear understanding of the new rules and guidelines.

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