Thursday, February 06, 2014

Harbinger of things to come?

FoIB Jeff M tips us to this interesting story out of North Carolina:

"Montgomery County employees are facing a change in regard to medical insurance coverage ... their recommendation to discontinue providing medical insurance to employees and to assist employees in pursuing insurance though the Marketplace"

As we've repeatedly mentioned here at IB, this is, in fact, the wave of the future: employers dumping their group plans and shunting their employees off to the Exchanges.

So much for "if you like your current plan, you can keep your current plan." We've already seen this playing out in the individual market, and group is on deck.

But it's the last line of the Herald story that piqued my interest:

"This assistance will include navigational, choice information and financial assistance" [emphasis added]

Here's the problem: under the train-wreck, groups can no longer use Health Reimbursement Arrangements (HRA's) to subsidize premiums. Jeff asked whether or not the employer could provide a "stipend" to each employee to help with the cost of insurance and, if so, what effect that would have on said employees' taxes.

I suspected that I knew the answer, but sought confirmation from my HRA gurus at FlexBank, who did not disappoint. Years ago, we used to fund some key employees' life insurance plans through something called an Executive Bonus. This was simply a fancy way to give the employee the money to pay for a personal life insurance plan, and it was (of course) included on their W-2's.

This seems to be the only legitimate arrangement open to the folks running Montgomery County; one suspects that the employees being unceremoniously dumped from their current health plans will be none too pleased to see the extra tax liability.

Talk about adding insult to injury (neither of which, apparently, are covered under the ObamaTax).
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