August 15, 2013
Authored by: Chris Rylands
As noted in this New York Times article, the Office of Personnel Management issued a rule recently that will allow Congressional Representatives and Senators and their staff to receive payments from the federal government to help them defray the cost of insurance through the exchange. This was designed to alleviate some fears of a Congressional “brain drain” that could have occurred if long-time Congressional aides left their posts due to concerns over the cost of insurance. The Obama Administration sought to solve this problem by saying that the Federal Employees Health Benefit Program will provide cash to help offset the cost of insurance purchased through the exchanges.
This is, functionally, a premium-only health reimbursement arrangement run by the Federal government. Interestingly, if a private employer (or even another governmental employer) sought to set up such an arrangement with public exchange coverage, it would expressly be forbidden. Pursuant to FAQ guidance issued by the Departments of Labor, Treasury, and Health and Human Services (see Q2 here), an HRA may not be considered integrated with individual market coverage. This would mean that the employer would be treated as not sponsoring a health plan providing minimum essential coverage, subjecting them to play or pay penalties. The HRA itself would likely violate other provisions of health care reform.
Now employers can achieve a somewhat similar result by creating a private exchange, so it is not as though employers are without options. However, the inherent contradiction here should not be lost on those of us struggling to find ways to work with the Affordable Care Act. The Federal government effectively took a solution that would be beneficial for many employers, and kept it only for itself.