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In 2002, the U.S. federal government made it explicitly legal for employers to reimburse employees, tax-free, for the premiums on personal health insurance policies.
However, when this first became legal back in 2002:
All states are now required under HIPAA to offer state-guaranteed personal health policies to employees that lose their group coverage (called "HIPAA-eligibles"). Forty (40) states go far beyond this federal mandate and offer state-guaranteed personal health policies to all of their residents with preexisting medical conditions even if they were never covered under an employer group plan.
The number of personal health policies doubled from 12 million members in 2002, to 35 million members in 2012, and is expected to reach 60 million members by 2014. United Healthcare, the largest health insurance carrier in the U.S. offering group plans to employers, purchased several personal policy carriers (Golden Rule, AMS, PacifiCare, etc.) and is today the largest carrier offering personal health policies.
45 states have changed their laws allowing carriers to sell personal policies at much lower prices to healthier and/or younger applicants-the last three states to liberalize their personal policy insurance laws were Kentucky, New Hampshire and Washington. The price of small employer group policies keeps escalating as more healthy employees and/or dependents leave group and switch to permanent, portable, personal policies.
ZaneHRA was launched in 2006 in response to the enormous demand by employers for Defined Contribution Employer Health Benefits. ZaneHRA is SAS 70 approved and complies with all HIPAA, ERISA, and U.S. Treasury regulations. See What is ZaneHRA?
The cost of group coverage has more than doubled since 2002, and is on target to double again in just the next 5 years. Each year since 2002 there are 2 million fewer employees receiving employer group coverage because of cost.1
Why don't some state officials want employers and employees to know about Defined Contribution Employer Health Benefits?
Each private sector employee with a preexisting medical condition covered by a private employer group plan is potentially one less employee and/or dependent that the state is legally obligated to cover under federal law.To slow the adoption of Defined Contribution Employer Health Benefits, a few state insurance departments have tried (unsuccessfully) to limit insurance carriers in their state from allowing personal policy holders to accept tax-free reimbursement of premiums from employers. These actions have been ineffective because the state insurance departments regulate insurance carriers, not employers, and the tax-free reimbursement of premiums on personal health policies is explicitly allowed and regulated by U.S Treasury, ERISA, and HIPAA federal regulations.
How do we get started?