Paying workers with health issues to get exchange-market insurance violates the law, feds say
Many major companies are self-insured. So paying employees with significant health issues to opt out of the company medical plan and get coverage on the insurance exchange market could be a big cost-saver.
Someone with hemophilia or hepatitis could rack up hundreds of thousands of dollars annually in medical costs. Paying for that person’s insurance via the program established by Affordable Care Act would cost only about $10,000, Kaiser Health News reports, because the cost of coverage on the insurance exchange market is set regardless of pre-existing conditions.
But there’s one big problem with that idea: It’s illegal, the feds say.
In a Nov. 6 bulletin, the U.S. Department of Labor warns against the practice. Health and Human Services and the Treasury Department issued similar warnings, the Kaiser article reports.
There’s good reason for them to do so: Shifting a high-cost individual to the insurance exchange means other insured individuals and the taxpayers absorb the extra cost of medical care for that person, the article explains.
Although the ACA doesn’t seem to restrict employers from paying employees to get outside insurance, other laws—including the Health Insurance Portability and Accountability Act and the Public Health Service Act—do, these federal agencies say.
According to the regulators, “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,” according to the regulators, said attorney Amy Gordon of McDermott Will & Emery.
The article doesn’t say what the penalties would be for doing so.
