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Feds confirm that more employers are bypassing health insurance reform law

January 29, 2013

This week the federal government confirmed a trend that I suspected was growing in the group health insurance market: a owing number of employers are essentially doing to an “end run” around health insurance reform laws by switching to online insurance like Freedom Benefits’ popular Core Health Insurance that is exempt from the law. Last week the Department of Labor, in conjunction with Health and Human Services (HHS), and the U.S. Department of Treasury published a release that said:

Fixed indemnity coverage under a group health plan meeting the conditions outlined in the Departments’ regulations(3) is an excepted benefit under PHS Act section 2791(c)(3)(B), ERISA section 733(c)(3)(B), and Code section 9832(c)(3)(B). As such, it is exempt from the health coverage requirements of title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code. The Departments have noticed a significant increase in the number of health insurance policies labeled as fixed indemnity coverage.” (emphasis added).

Many employers are required to notify employees of the availability of online health insurance exchanges by March 1, 2013 and I suspect that this next action by employers may motivate even more people to seek out this type of alternate insurance on the Web.

While this limited insurance is easier to use and less expensive than the government-designed coverage created by health reform law, it also leaves gaps in protection that will inevitably create problems for some covered individuals. Fortunately the new law allows those with chronic expensive health problems to switch to the other type of comprehensive coverage at any time.

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