Regulators Extend Enforcement Relief for Employers Offering Premium Reduction Arrangements in Connec Regulators Extend Enforcement Relief for Employers Offering Premium Reduction Arrangements in Connec

Regulators Extend Enforcement Relief for Employers Offering Premium Reduction Arrangements in Connection with Student Health Coverage

On October 21, 2016, the Department of Labor, and the Department of Health and Human Services, and Internal Revenue Service ("IRS") (collectively, "Departments") announced that pending further guidance, the Departments are extending the enforcement relief for colleges and universities that offer premium reduction arrangements in connection with student health insurance plans.

"Premium reduction arrangements" are arrangements designed to reduce the cost of student health insurance (whether fully-insured or self-insured) to students through a credit, offset, reimbursement, stipend, or similar arrangement.  Generally, colleges and universities use these types of arrangements to pay for some or all of the cost of student health coverage for their graduate students.  The IRS has issued a series of Notices that provide that premium reduction arrangements may constitute employer payment plans that are subject to the Affordable Care Act ("ACA") market reforms, including the prohibition on annual dollar limits on essential health benefits.  These Notices further provide that employer payment plans cannot be integrated with individual insurance coverage in order to satisfy the ACA market reforms.  Student health insurance is defined as individual insurance coverage under federal regulations.

The IRS announced in Notice 2016-17 that the Departments would not take enforcement action against premium reduction arrangements offered in connection with student health insurance plans for plan or policy years that began before January 1, 2017.  In extending the relief until further guidance is issued, the Departments noted that premium reduction arrangements offered by colleges and universities to their graduate students are often part of a large and complex admission offer and acceptance process, and that Congress intended that the ACA preserve the ability of colleges and universities to offer student health insurance plans otherwise permitted under applicable Federal, State, or local law.  The Departments announced this welcome extended enforcement relief as part of the FAQs About Affordable Care Act Implementation Part 33.

For more information, please contact Mary Beth Braitman, Raven Merlau, Tara Sciscoe, Chris Sears or the Ice Miller Employee Benefits attorney with whom you work.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

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