New Colorado Law Allows Small Employers to Contribute Toward Employees’ Health Insurance Coverage
On March 29, 2011, Colorado Governor Hickenlooper signed a new law that allows small employers (50 or fewer employees) to use Health Reimbursement Arrangements (HRA’s) to pay or reimburse employees for the costs of health insurance premiums.
While in the past it was illegal for employers to pay for employees’ individual/family insurance plan premiums, the new law seemed to change that. While this appears to be legal at the State level, some legal experts claim that it is illegal under Federal law.
Employers who contribute to or reimburse employees for individual plan premiums through an HRA may cause the Individual/Family policy to be seen as part of an Employer Sponsored Group Health Insurance plan and subject to the requirements found in ERISA, COBRA, HIPPA and other Federal mandates. By combining an HRA and an individual policy funded by the HRA the employer could be liable for medical costs for benefits not covered by individual plans, but that are required by Federal laws that govern group plans. Also, CoverColorado may not cover applicants when an HRA replaces a group plan.
Colorado’s Senate Bill 11-019 allows a small employer to reimburse an employee through wage adjustments or health reimbursement arrangements for any portion of a premium for an individual health insurance plan if the small employer has not had a small group health benefit plan for its employees in the previous 12 months. Under this ruling, employers that don’t offer small group health coverage and have fewer than 50 employees can contribute any amount of money, as long as it is distributed equally, into an employee’s Health Reimbursement Account.
Senate Bill 11-019 adds the following language to the Colorado Revised Statues:
“10-16-105.2. Small employer health insurance availability program. (1.5) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, A SMALL EMPLOYER THAT DOES NOT HAVE, AND HAS NOT HAD IN THE PREVIOUS TWELVE MONTHS, A SMALL GROUP HEALTH BENEFIT PLAN PROVIDING COVERAGE TO ITS EMPLOYEES UNDER THIS ARTICLE MAY REIMBURSE AN EMPLOYEE, WHETHER THROUGH WAGE ADJUSTMENTS OR HEALTH REIMBURSEMENT ARRANGEMENTS, FOR ANY PORTION OF THE PREMIUM FOR A HEALTH COVERAGE PLAN.”
Colorado Health Insurance Brokers has a portfolio of legal HRA Small Group Health Insurance Plans that allow companies with 2-50 employees to offer employees an HRA option, even if the company has had a group plan in place within the past 12 months.
Learn more about group Health Reimbursement Arrangement plans. Request a quote today!
Colorado Health Insurance Brokers does not offer legal advice. For legal advice seek the guidance of a qualified legal professional.