Here is a health insurance challange. Employer has 42 employees. 10 are in Florida and the other 32 spread all over the country, mainly in rural areas. Employer wants to offer health insurance to all, but the carrier benefits outside of Florida are awful. There aren't enough people in any of the other states to offer anything meaningful.
Employer wants to provide group medical to the Florida group, and then have everyone else purchase private individual health insurance. Employer wants to reimburse the non-Florida employees an equal percentage of the private premium and allow them to pretax the balance of the premium in a separate private insurance reimbursement account. They will also have a medical FSA and a DCAP.
I advised that employer participation like this makes it an ERISA plan and also makes the individual plans subject to COBRA.
Does anyone have any comments or suggestions for this type of situation?
Thank you.

In addition to COBRA, you'll also face challenges with individual policies and complying with


Ø HIPAA (Health Insurance Portability and Accountability Act)

Ø USERRA (Uniformed Services Employment and Re-employment Rights Act)

Ø FMLA (Family Medical Leave Act)

Ø PDA (Pregnancy Discrimination Act of 1979)

Ø ADEA (Age Discrimination in Employment Act)

Ø ADA (Americans with Disabilities Act).

Wouldn't the reimbursement by the employer cause the policies and the arrangement to fall under the Small Group health insurance and "list billing" laws? I think that most carriers would not issue if this was known or is found out.

GBurns is correct about the indiv policies being considered a list bill type of arrangement. In order for the employer to make this type of arrangement work, the employer would need to offer the employees a salary increase in lieu of health insurance, without any type of requirement that they purchase health insurance, and the employer cannot take a fed tax benefit towards health insurance.

Might work, give it a try.