For many years, some “con­sul­tants” (and one in par­tic­u­lar) have been telling employ­ers that they can can­cel their group poli­cies, set up a Code Sec­tion 105 (IRC 105(h)) reim­burse­ment plan that works with bro­kers to help select indi­vid­ual health poli­cies and get the pre­mi­um tax cred­its for Mar­ket­place cov­er­age.  This is NOT per­mis­si­ble accord­ing to the new FAQ issued by the Depart­ment of Labor.  There are sev­er­al rea­sons giv­en, which should final­ly close the door:

1)    The arrange­ments are con­sid­ered to be group health plans and thus no tax cred­it allowed

2)    Just because an employ­er is not involved with plan selection/purchase does not pre­vent the arrange­ment from being a group health plan

3)    Such arrange­ments are sub­ject to mar­ket reform (under four sep­a­rate notices) which pro­hibits annu­al lim­its and requires pre­ven­tive care be offered with­out cost shar­ing.  “Such employ­er health care arrange­ments can­not be inte­grat­ed with indi­vid­ual mar­ket poli­cies to sat­is­fy the mar­ket reforms and, there­fore, will vio­late PHS Act sec­tions 2711 and 2713 among oth­er pro­vi­sions which can trig­ger penal­ties such as an excise tax.