Can Employers Pay for Employees in Exchanges? No.

By Keith R. Mcmurdy

On November 6, the DOL issued FAQ Part 22, which directly addresses some recent efforts by employers to reimburse employees for participation in the exchange through Code Section 105, or through some type of other arrangement.  Here are the questions, with shortened answers.  For a complete copy of the notice, click this link.

Q1: My employer offers employees cash to reimburse the purchase of an individual market policy.  Does this arrangement comply with the market reforms?

No.  If the employer uses an arrangement that provides cash reimbursement for the purchase of an individual market policy, the employer’s payment arrangement is part of a plan, fund, or other arrangement established or maintained for the purpose of providing medical care to employees, without regard to whether the employer treats the money as pre-tax or post-tax to the employee.  Under the Departments’ prior published guidance, the cash arrangement fails to comply with the market reforms because the cash payment cannot be integrated with an individual market policy.

Click here for entire article.