Employer Health Insurance Plans and Employment Law
One of the employment benefits that employees value most is health insurance, but it's a highly regulated undertaking for employers. Changes to some health insurance laws were made in February 2009 as part of the stimulus package passed by Congress, and even more changes to health care benefits are expected in the near future.
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Potential changes to health insurance and how it might affect employers
President Barack Obama has stressed the necessity of health care reform in 2009, and Congress has been working on health care reform legislation for the last several months. The U.S. House of Representatives recently passed the Affordable Health Care for America Act (H.R. 3962), legislation that combines three different health care reform bills approved by House committees this summer. The massive legislation would create an insurance exchange that offers insurance through private companies as well as through a government-run public option. The bill would have a tremendous effect on employers through several immediate reforms, most of which would be effective for plan years beginning January 1, 2010, and through many other provisions that would generally become effective in 2013.
The U.S. Senate is also working on its own version of health care reform legislation. Senate Majority Leader Harry Reid (D-Nevada) is still trying to consolidate two Senate health care reform bills before he takes a final bill to the Senate floor for debate. If the Senate passes its own health care reform bill, it would have to be reconciled with the House bill.
Keep up with the latest changes in laws regarding employee benefits with the Benefits and Compensation Law Alert and the Benefits and Compensation Law for Non-Profits.
American Recovery and Reinvestment Act of 2009
On February 17, 2009, President Obama signed a stimulus bill called the American Recovery and Reinvestment Act of 2009 (ARRA), into law. ARRA contains several provisions relating to health care benefits including:
- COBRA subsidy. Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), an individual may usually keep health coverage through a previous employer’s health plan for up to 18 months by paying 102% of the cost of coverage. Under the ARRA, the federal government pays 65% of COBRA premiums for up to nine months for employees who were involuntarily terminated between September 1, 2008, and December 31, 2009. Members of Congress in both the House and the Senate have recently introduced legislation that would extend the original COBRA subsidy created by ARRA.
- HIPAA changes. The Health Insurance Portability and Accountability Act (HIPAA) was originally passed in part to address another area of employee concern about health benefits -- whether they could obtain coverage for health conditions they or their families had before they obtained benefits under a new health plan. The ARRA expands HIPAA’s privacy and security regulations, and under the stimulus package, business associates of covered entities will be directly subject to HIPAA. The stimulus plan also extensively changes HIPAA on other issues, including security breaches and related notification requirements, the rights of individuals regarding their protected health information, and increased enforcement and penalties for violations.
Other federal laws regarding health insurance offered by employers
The following is an overview of a few of the other major laws affecting health insurance plans offered by employers.
- ERISA. The Employee Retirement Income Security Act’s (ERISA) main purpose is to protect employees from losing their pensions due to harsh vesting rules or poor management, but the law covers health benefits as well.
- FMLA. The Family and Medical Leave Act (FMLA) gives eligible employees the right to take up to 12 workweeks of unpaid leave during any 12-month period for any of these reasons: (1) to care for their newborn child, (2) for placement of a child for adoption or foster care, (3) to care for a child, spouse, or parent with a serious health condition, (4) to obtain treatment for and recover from their own serious health condition, or (5) for qualifying exigencies that occur when they have a parent, spouse, or child called to active duty in the military.
- Cafeteria plans (Section 125 plans). Cafeteria plans are tax-advantaged accounts that allow employees to pick and choose from a number of different employee benefits they can fund with pre-tax dollars. They’re also called flexible spending accounts (FSAs), or health FSAs if they offer a choice of health benefits.
- Other laws. Other federal laws and regulations dealing with more specific aspects of employer health care plans include the Mental Health Parity and Addiction Equity Act, the Medicare Modernization Act (MMA), and the Uniformed Services Employment and Reemployment Rights Act (USERRA). Several federal laws banning employment discrimination also prohibit discrimination in employee benefits, one of the most important terms and conditions of employment. Such laws include the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964, and the Equal Pay Act.
Audit your health benefits policies and practices with the Employment Practices Self-Audit Workbook
Same-sex marriages, civil unions, and domestic partner benefits
This area of the law is rapidly evolving in our nation’s courts and legislatures. Laws prohibiting discrimination based on sexual orientation, including domestic partner benefits, appears to be a very hot issue in a number of states. Some states (and even some cities) have legalized same-sex marriages and/or civil unions, while others have amended their constitutions to forbid them. Some organizations, moreover, have chosen to offer benefits to their employees’ same-sex partners, and others cover both same-sex and opposite-sex but unmarried unions.
Audio Conference: Same-Sex Marriages: Overcoming Policy, Benefit and Payroll Challenges
State laws on employee benefits
States have continued to weigh in on employment and benefits issues. There’s been a steady trend for states to require employers or insurance companies to cover certain medical conditions, with coverage mandates increasing over the years. States also have a history of regulating workers’ compensation insurance, a parallel health insurance system for work-related injuries and illnesses.
State-by-state comparison of 50 employment laws in all 50 states
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- White House, Organized Labor Reportedly Make Deal on ‘Cadillac’ Tax
(Human Resources News, January 2010)
- Amended Senate Health Care Reform Bill: What It Means for Employers
(Human Resources News, December 2009)
- COBRA Subsidy Extension Legislation’s Effect on Employers
(Human Resources News, December 2009)
- President Signs COBRA Subsidy Extension Legislation into Law
(Human Resources News, December 2009)
- Senate Votes to Extend COBRA Subsidy
(Human Resources News, December 2009)
- House Passes COBRA Subsidy Extension and Expansion
(Human Resources News, December 2009)
- Wellness Programs and the Health Care Reform Debate
(Maine Employment Law Letter, December 2009)
- COBRA Bills Face Uncertain Future as Federal Subsidy Begins to Expire
(Human Resources News, November 2009)
- Many Implications for Employers in Senate Health Care Reform Bill
(Human Resources News, November 2009)
- House Passes Momentous Health Care Reform Legislation
(Human Resources News, November 2009)
- Senators Introduce Another COBRA Subsidy Extension Bill
(Human Resources News, November 2009)
- House Health Reform Bill’s Impact on Employers
(Human Resources News, November 2009)
- Congressman Introduces COBRA Subsidy Extension Legislation
(Human Resources News, October 2009)
- Our Best Benefits Bet: Congress Will Extend COBRA Subsidy
(Human Resources News, October 2009)
- DOL Issues COBRA Model Notices
(Human Resources News, March 2009)
- What the Obama Stimulus Plan Means for Employers: COBRA, Benefits, and More
(HR Hero White Papers , March 2009)
- More Details on COBRA Continuation Subsidy in Stimulus Package
(Human Resources News, February 2009)
- Stimulus Bill Brings COBRA, Other Issues for Employers
(Human Resources News, February 2009)
- What Obama's Economic Stimulus Plan Means for Employee Benefits Plans
(Benefits and Compensation Law Alert , February 2009)
- Managing Employee Health Insurance Premiums under Revised FMLA Regulations
(Georgia Employment Law Letter, October 2009)
- Employers Face Decisions for 2010 While Health Care Reform is Debated
(Federal Employment Law Insider, October 2009)
- Online Resources for Information on Health Care Reform
(Human Resources News, August 2009)
- Using Wellness Programs to Reduce Health Care Costs
(Mississippi Employment Law Letter, August 2009)
- House, Senate HELP Committee Health Care Reform Bills
(Human Resources News, July 2009)
- Senate Finance Committee's Proposals to Expand Health Care, Reduce Costs, and Pay for It All
(Benefits & Compensation Law Alert, July 2009)
- Senate Finance Committee Maps Routes to Health Care Reform
(Benefits & Compensation Law Alert, June 2009)
- Health Care Reform: Taxing Health Benefits Could Cause Unintended Consequences
(Iowa Employment Law Letter, June 2009)
- Senate Report Outlines Possible Approaches for Health Care Reform
(Human Resources News, May 2009)
- IRS Issues New COBRA Guidance for Employers
(Human Resources News, April 2009)
- Health Care Outlook for Employers
(HR Hero White Papers, April 2009)
- New Requirements on Group Health Plans Starting April 1
(West Virginia Employment Law Letter, April 2009)
- IRS Issues New COBRA Guidance for Employers
(Human Resources News, April 2009)
- DOL Issues COBRA Model Notices
(Human Resources News, March 2009)
- What the Obama Stimulus Plan Means for Employers: COBRA, Benefits, and More
(HR Hero White Papers , March 2009)
- Mental Health Parity Act Effective Date Delayed
(Employers State Law Alert, February 2009)
- More Details on COBRA Continuation Subsidy in Stimulus Package
(Human Resources News, February 2009)
- Stimulus Bill Brings COBRA, Other Issues for Employers
(Human Resources News, February 2009)
- What Obama's Economic Stimulus Plan Means for Employee Benefits Plans
(Benefits and Compensation Law Alert , February 2009)
- New Law Addresses Mental Health Coverage Parity
(Utah Employment Law Letter, December 2008)
- IRS Issues New Guidance for HSAs
(Federal Employment Law Insider, August 2008)
- Employer Wellness Programs Need a HIPAA Checkup
(Oklahoma Employment Law Letter , July 2008)
- Are Single, Childless Workers Shortchanged by Benefit Plans?
(Virginia Employment Law Letter, November 2007)
- HIPAA Security Rule Compliance Deadline Approaches
(Georgia Employment Law Letter, March 2006)
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