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IRS Proposal Clarifies Employer-Sponsored Coverage Rules

01/02/13

  06:03:57 pm, by MedBen5   , 184 words,  
Categories: News, Health Plan Management

IRS Proposal Clarifies Employer-Sponsored Coverage Rules

A few hours before adjourning for New Year festivities, the Obama administration issued an interpretration of employer health care coverage rules under the Affordable Care Act.

According to The New York Times, new provisions proposed by the Internal Revenue Service state that employers with 50 or more full-time employees must offer health insurance to employees and their children. However, if dependent coverage is unaffordable to workers, the employer will not be subject to any penalties.

As to how “affordable” is defined, the IRS proposal said it depends solely on the cost a worker would pay for individual insurance. Self-only coverage under an employer-sponsored plan that “does not exceed 9.5 percent of the employee’s household income” is affordable, according to the proposal.

The definition does appear to create a strong incentive for employers to promote employee-only coverage by offering “affordable” individual premiums, and substantially higher rates for dependents. Spouses are not considered dependents under the IRS rules.

The administration did not clarify whether or not the family of an employee will alternately be able to obtain federal subsidies to help them buy coverage through insurance exchanges.

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