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Colleges/Universities Granted Extended Relief for Premium Reductions in Connection with Student Health Insurance

The Departments of Labor, Health and Human Services and the Treasury (collectively, the “Departments”) on Friday extended enforcement relief, via publication of FAQs About Affordable Care Act Implementation Part 33 (“FAQs”), to higher education institutions for arrangements that provide reduced or no-cost student health insurance coverage.

Student health insurance is a type of individual coverage offered to students and their dependents, typically through a contract between a higher education institution and an insurer. Many higher education institutions provide student health insurance to students at no cost or a reduced rate in an effort to make coverage more affordable for students. For students who perform services for the higher education institution, these arrangements raise compliance issues under the Affordable Care Act (“ACA”).

The Departments have interpreted the ACA rules as prohibiting arrangements classified as employer payment plans, which are group health plans under which an employer provides a reimbursement for some or all of the premium expenses for individual health insurance or a policy issued on the Marketplace Exchange. Without relief, the practice of paying all or a portion of the premium for student health insurance coverage could violate these rules if the arrangement covered a student providing services to the higher education institution.

On February 5, 2016, the Departments issued guidance indicating that they would not take enforcement action against a higher education institution merely because the institution provides a premium reduction for student health insurance coverage for a plan year or policy year beginning before January 1, 2017. Since this relief did not extend to plan or policy years beginning after December 31, 2016, it was not clear whether premium reductions for student health insurance arrangements would be permitted after 2016.

In the FAQs issued this past week, the Departments advised that the enforcement relief provided on February 5, 2016 would be extended indefinitely until the Departments issue further guidance. Therefore, for plan and policy years beginning after 2016, higher education institutions may continue to offer premium reductions for student health insurance arrangements, whether self-funded or fully insured, without concern that the Departments will take enforcement action.

 

© Copyright 2020 Armstrong Teasdale LLP. All rights reserved National Law Review, Volume VI, Number 304
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About this Author

John Igoe, Tax, Employee Benefits, Trusts, Estates, Attorney, Armstrong Teasdale
Partner

As a member of the Tax, Employee Benefits and Trusts and Estates practice group since 1986, Jon Igoe guides individuals in the creation and administration of trusts and estates and in connection with closely-held businesses. He also handles guardianships, conservatorships and employee benefits issues involving health care plans.

314-342-8019
Sarah Sise practices exclusively in the heavily regulated and constantly evolving field of employee benefits and executive compensation.
Partner

Sarah Sise practices exclusively in the heavily regulated and constantly evolving field of employee benefits and executive compensation. She advises a wide range of clients, including closely-held companies, tax-exempt organizations and public companies.

Sarah brings over 17 years of experience to the firm and partners with clients to establish, design and implement qualified retirement plans, non-qualified arrangements, welfare and fringe benefit plans, and executive compensation programs. She also guides clients through plan audits and service provider changes.

 

314.342.8062
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