Does Section 125 apply to
Individual Plans?
Is it possible for an employer to pay a portion of an individual insurance premium on behalf of an employee through a POP Section 125 plan?
The state of Missouri has legislated changes
***Do you have a copy of that? CA provides it on their website
leginfo.ca.gov/
that will allow employers to make a defined contribution to an individual insurance policy on behalf of an employee. This is intended to increase portability by allowing individuals to keep the coverage that they already have,
***COBRA & HIPAA already to do that
but there seem to be a lot of issues surrounding this. Basically, the legislation appears to require employers that offer small group coverage
***AB 1672 in CA says that if any portion of premium is paid by employer, the employer is subject to that law. There would be a problem with Participation Requirements - there are only certain plans allow an employee to opt out of group coverage, individual plans are not one of them.
to also establish Section 125 plans and allow them to use those plans to pay individual premiums. There appear to be issues/concerns about adverse selection as well as the possibility that arrangements such as this might discourage employers from offering group benefits thereby leaving the most unhealthy individuals unable to obtain coverage (since they would be shopping on the individual market).
I'm kind of stuck trying to understand too many things at once. tax code, ERISA,
***This looks like a definate violation of Section 1182 of ERISA, where an Employer can't discrimate because of Health, which this would do
Sec. 1182 ERISA . - a group health plan, and a health insurance issuer offering group health insurance coverage in connection with a group health plan, may not establish rules for eligibility (including continued eligibility) of any individual to enroll under the terms of the plan based on any of the following health status-related factors
Sec. 1182(b) (1) In generalA group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, may not require any individual (as a condition of enrollment or continued enrollment under the plan) to pay a premium or contribution which is greater than such premium or contribution for a similarly situated individuals see also AB 1672
l enrolled in the plan on the basis of any health status-related factor in relation to the individual or to an individual enrolled under the plan as a dependent of the individual. Cornell Law Findlaw
CA Insurance Department - Health Underwriting Survey
California AB 356 §10113.95 - CA Insurance Commissioner now posts Underwriting Guidelines or a list of what might be considered Pre-existing conditions.
etc. and can use all the help I can get.
***You might also check with NAÏFA and NAHU for their legislative analysis.
All the best,
Sarah
