Hello Everyone! I apologize for the long gap in posts. Things have been moving quickly on the state and federal legislative front over the past month. Here is a quick rundown:
Federal Changes: 1) The potential $100 per day fine for small employers offering DPC has been eliminated, 2) the DPC Coalition expects an HSA clarification within the two months of 2017 either with the passage of legislation or in the form of a presidential executive order (feel free to join the DPC Coalition for a DC fly in from Jan 4-6, and 3) there is speculation that states will be provided with more autonomy from the federal government to redesign their Medicaid programs (and many of these could involve DPC pilots).
Today the H.R. 34: 21st Century Cures Act passed. DPC physicians should read Sec 18001. "Exception from group health plan requirements for qualified small employer health reimbursement arrangements." This law effectively ends the $100 per day fine problem discussed here that small employers could face by offering their employees a "plan" that was something less than full health insurance as approved by the ACA. Here is the most important language:
"An arrangement is described in this subparagraph if—
(i)such arrangement is funded solely by an eligible employer and no salary reduction contributions may be made under such arrangement,
(ii)such arrangement provides, after the employee provides proof of coverage, for the payment of, or reimbursement of, an eligible employee for expenses for medical care (as defined in section 213(d)) incurred by the eligible employee or the eligible employee’s family members (as determined under the terms of the arrangement), and
(iii)the amount of payments and reimbursements described in clause (ii) for any year do not exceed $4,950 ($10,000 in the case of an arrangement that also provides for payments or reimbursements for family members of the employee)."
Recall the original problem - if DPC were defined as medical care under 213(d) - a stance we have been advocating from an HSA perspective - it would have led to the $100 per day fine for small employers. Now - either the IRS says that DPC is not a 213(d) expense - in which case the $100 per day fine would have never applied in the first place, or it is a 213(d) expense - in which case the above exception will get the employer out of the $100 per day fine.
The next quoted section demonstrates that we will be permitted to vary the monthly DPC fee based on age, but changing the price paid by the employer based on other employee categories (senior management vs factory worker) would not be permitted. The majority of DPC practice are not attempting to price discriminate except based on age, so this generally will not be a concern.
"(C)Certain variation permitted
For purposes of subparagraph (A)(ii), an arrangement shall not fail to be treated as provided on the same terms to each eligible employee merely because the employee’s permitted benefit under such arrangement varies in accordance with the variation in the price of an insurance policy in the relevant individual health insurance market based on—
(i)the age of the eligible employee (and, in the case of an arrangement which covers medical expenses of the eligible employee’s family members, the age of such family members), or
(ii)the number of family members of the eligible employee the medical expenses of which are covered under such arrangement.
The variation permitted under the preceding sentence shall be determined by reference to the same insurance policy with respect to all eligible employees."
The new law also provides transition relief, meaning that any employers that took a risk or made a mistake this year should not need to worry about enforcement of the $100 per day fine.
Except as otherwise provided in this paragraph, the amendments made by this subsection shall apply to years beginning after December 31, 2016.
The relief under Treasury Notice 2015–17 shall be treated as applying to any plan year beginning on or before December 31, 2016."
I'm happy to answer comments and questions below. 2017 is shaping up to be a great year for DPC physicians!