News

New health care law prohibits varying benefits among staff

Q&A with John Papahronis

published in The Oklahoman | November 16, 2010

McAfee & Taft employee benefits attorney John Papahronis was featured in The Oklahoman discussing the new health care reform law. It no longer allows employers to use their own discretion and provide more favorable benefits to certain employees.

Papahronis explained that, under the Patient Protection and Affordable Care Act, sponsors of fully insured group medical plans are prohibited from providing more favorable coverage to higher compensated individuals. Previously it has only been prohibited to self-insured group medical plans.

“One of the most common arrangements is charging executives less for their premiums than non-executives,” Papahronis told The Oklahoman. 

There are ways, though, for employers to avoid being subject to these new rules. “Fully insured medical plans that are determined to have met the Internal Revenue Service’s strict requirements for maintaining ‘grandfathered’ status are not subject to the new nondiscrimination rules,” said Papahronis.

Employers do need to be careful when staying in compliance. There are penalties for plans the IRS deems unsatisfactory. If a plan is viewed discriminatory it is subject to a civil action to fall back into compliance or an excise tax of $100 per day per individual discriminated against.