PAYDAY Workforce Solutions Blog

Discrimination in Healthcare and Benefits with the ACA

There are many opportunities for discrimination in the workplace, and many laws to prevent and address different forms discrimination. The right HR Solutions can help you understand ways to stay in compliance with nondiscrimination practices with the following laws that protect workers.

  • The Americans with Disabilities Act (ADA) makes it illegal for employers to discriminate against employees with disabilities in all employment activities, from recruitment, pay and promotion to job assignments and benefits.
  • The Employee Retirement Income Security Act (ERISA) and Health Insurance Portability and Accountability Act (HIPAA) both prohibit employer-sponsored health from discriminating against employees, including barring employees from coverage or access to a plan, charging some employees more for the same coverage than others, denying coverage to those who are sick or have a pre-existing medical condition and denying coverage to those who have not recently had medical coverage.
  • The Equal Employment Opportunity Commission (EEOC) prohibits workplace discrimination based on age, disability, compensation, genetic information, national origin, pregnancy, race, religion or gender.
  • Laws governing 401(k) or defined-contribution pension accounts prohibit retirement plans from discriminating against employees or favoring highly compensated employees over lower-paid employees for participation.

Now the Affordable Care Act (ACA) has a nondiscrimination rule that prohibits all employer health plans from providing highly compensated employees with better health benefits than other employees. Previously, this was only a requirement of self-funded plans but will soon apply to fully funded plans as well, although it isn’t yet fully implemented.

ACA Rules Take Effect in January 2014

The enrollment period for marketplace insurance plans is underway and the ACA will impact previously uninsured individuals and employers offering health plans. U.S. Department of Health & Human Services Secretary Kathleen Sebelius claims that the goal of the ACA is “for all Americans to live healthier, more prosperous, and more productive lives.”

The overarching goals of the ACA include strengthening health care, advancing scientific knowledge and innovation, advancing the health, safety, and well-being of Americans, more efficient health services, better accountability and strengthening health services infrastructures and workforce. These goals can’t be met if health care is flawed with discriminatory practices.

The ACA rules also ensure employers are not discriminating against employees because of their health status. Whether or not wellness programs actually produce long-term savings as expected, there are provisions in the ACA that allow employer health and wellness programs to provide employees the opportunity to lower their medical insurance premiums. Specific discrimination rules apply and should be carefully noted.

The ACA Still Allows Discrimination

While the Affordable Care Act extended nondiscrimination rules for health insurance to all plans, not just self-funded plans as before, the final rules covering nondiscrimination in health plans have not yet been issued as of January 2014. The IRS won’t be able to enforce nondiscrimination rules until final rules are issued, and Littler Mendelson Healthcare Reform Consulting Group attorney Steve Friedman says it’s doubtful that the final rules will be announced this year. He also reminds everyone that the final rules will not apply to grandfathered plans, and those companies with grandfathered plans may be able to continue to “discriminate” by offering better insurance to management and salaried employees as in the past.

So although it seems that the more things change, the more they stay the same, employers will face stiff fines if their non-grandfathered policies favor highly paid employees in the near future. Companies should start planning, as rules will probably be finalized for 2015 plan years.

PAYDAY's newest Smart Solution, Beneforce Insurance Solutions, can help with ACA planning. Contact us today to set up a free planning session.

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