Cobra & Obama care

[Guest dsusan69]

Our legal department said that under Obama care we can no longer pay for an EE's COBRA. Is this true? Would you please give me the link with the answer?

There are income limitations for Obama care that is what is making me say this is not true.

Thank you for your help.

[J Simmons]

Under Obamacare, payment by an employer of an employee's premiums for individual policy coverage is now prohibited. See IRS Notice 2013-54 and DoL Tech Release 2013-3. It's not just a tax deductibility issue; It's now illegal to do it (except if the policy is bought on the Exchange under the employer's SHOP registration, which is only available to small employers).

I've not seen anything directly address the payment of COBRA premiums. However, they would be for the continuation of group coverage, either under your group policy for an employee no longer meeting the regular eligibility rules or under the prior employer's group plan for a new-to-you employee. SInce it is group coverage that is continued, barring some direct statement to the contrary (of which I am not aware), I think that the employer can pay the premiums.

[KED]

Your legal department may be thinking about the nondiscrimination rules for fully insured plans. if you pay COBRA premiums for a highly compensated individual, but not for everyone else, then you could have a discrimination problem. The penalty falls on the Company and would be something like $100 per day per person discriminated against (so $100 times all of the other employees without the benefit times the number of days). We are awaiting regulations for the new rules and the IRS has indicated it will not enforce penalties yet, but many are changing their ways now. Also, it may be hard to change the promise later when the rules are finalized.