September 29, 2020

Volume X, Number 273

September 29, 2020

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September 28, 2020

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Healthcare Subsidies for Grad Students: Problem Solved?

This summer we wrote about an impending issue under the Affordable Care Act (“ACA”) for colleges and universities wishing to provide graduate student employees with a stipend or reimbursement to defray the cost of medical coverage under a student health plan. Though a common arrangement, guidance issued in connection with the implementation of the ACA meant that schools could be subject to severe penalties for, in effect, using a “health reimbursement arrangement” to reimburse the cost of individual (rather than group) healthcare coverage.

Earlier this year, Notice 2016-17 provided temporary relief by indicating that schools would not be penalized for any such arrangements with a plan year beginning prior to January 1, 2017. Last week, the agencies responsible for issuing ACA guidance released further FAQs indicating that this temporary relief will be extended indefinitely (pending further guidance).

This is good news for the many schools that have been unhappy about the options for restructuring their benefit plans in order to avoid penalties. Although the latest guidance does not guarantee a permanent fix, the reasoning contained therein suggests that the agencies are aware that a special rule should apply in the college and university setting.

Jackson Lewis P.C. © 2020National Law Review, Volume VI, Number 301


About this Author

Kellie M. Thomas, Jackson Lewis, Executive Compensation Lawyer, ERISA Plan Benefits Attorney

Kellie M. Thomas is an Associate in the Baltimore, Maryland office of Jackson Lewis P.C. Her practice focuses on a variety of employee benefits, executive compensation, and employment law matters, including general compliance and administration of qualified retirement plans and welfare plans under ERISA and the Internal Revenue Code, deferred compensation issues arising under Code Section 409A, and preventive advice and counsel with respect to workplace law matters.

While attending law school, Ms. Thomas was an Associate...