Employers shouldn't incent employees who are costly to cover to purchase plans on the health insurance exchanges, the Obama administration said in a frequently asked question bulletin.
The trend of employers shifting employees to exchanges impacts insurers and has worried consumer advocates because it could lead to an eroding of the employer-sponsored market, while potentially increasing costs and premiums in exchange plans, Kaiser Health News reported.
Indeed, a study last year found that employer-based coverage, once the cornerstone of the market, has eroded substantially, FierceHealthPayer previously reported.
The U.S. Departments of Health and Human Services, Labor and Treasury said in the FAQs that employers who move high-cost workers are discriminating against those employees based solely on health status.
Obama administration officials worked with independent lawyers to clarify the issue earlier this year, saying, "We don't like this, but how can we address this?" Christopher Condeluci, principal at legal firm CC Law & Policy, told Kaiser Health News. The bulletin is the first explanation of how and why the administration believes it violates the law, he added.
Although the Affordable Care Act doesn't prohibit companies from paying their sick employees to get coverage through exchanges, the Health Insurance Portability and Accountability Act and the Public Health Service Act do, the agencies said.
"If you were to cherry-pick your high-cost individuals and offer them money to send them over to the exchange … this would be a violation of HIPAA," Amy Gordon, a benefits lawyer with McDermott Will & Emery, told KHN.