Employee Benefits

Sometimes Law Gets in the Way

Ed Oleksiak
Ed Oleksiak
Sr. Vice President, Employee Benefits

The Affordable Care Act (ACA) made famous the quote: “We have to pass the bill so that you can find out what is in it.”

The rollout of the ACA over the last six years is a great case study of how difficult it is to coordinate between Federal and State concerns; individual and employer concerns; and the Internal Revenue Service (IRS), Department of Labor (DOL), and the U.S. Department of Health and Human Services (HHS). While the ACA may be the most famous, there are other laws and regulations that get in the way.

Consolidated Omnibus Budget Reconciliation Act

Many retirees wish to stay on their employer’s plan because of the benefit coverage and possibly for continued access to their doctors. If retirees elect Consolidated Omnibus Budget Reconciliation Act (COBRA) and if they’re eligible for Medicare but don’t enroll within the 8-month grace period, then they face a compounding penalty of 10 percent per 12-month period — which is added to the Medicare premium once they enroll for the remainder of their life. This is because, at this time, COBRA coverage elected at retirement doesn’t delay the enrollment requirement of Medicare Part B.

Health Savings Account (HSA)

Once someone is enrolled in Medicare, he or she is no longer eligible to contribute to an HSA. The trap for the unwary is that once you start drawing Social Security, you’re automatically enrolled in Medicare Part A.

As more employers incorporate an HSA-eligible High Deductible Health Plan into their benefit options, this restriction creates challenges for both the employer and Medicare-eligible individuals.

Many innovative ideas like on-site medical clinics, telemedicine, and deductible credits for high-quality/low-cost center of excellence solutions are ground to a halt because of the HSA restriction requiring the deductible to be met to remain eligible to contribute to an HSA.

It’s too bad some of the energy spent arguing over a single-payer system or repealing Obamacare isn’t spent fixing some simple problems where laws just simply get in the way.

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