Employee Discount for PT Services - Does it create ERISA plan?

[waid10]

Hi. A physical therapy practice offers all employees (doesn't matter full-time, part-time, HCE, NCHE) and their families a workplace perk. They have a policy where employees and families receive a discount on any physical therapy services they need. The employee provide insurance information and insurance is then billed. The employee is responsible for paying all cost share amounts. After that, the employee pays no more than $75 per visit. 

My questions are:

1. Is this structure permissible?

2. Does this policy create an ERISA-covered plan that would require a plan document, 5500, etc.?

Thanks.

[Brian Gilmore]

So you're saying the employer will reimburse a portion of the cost-sharing paid by the employee to ensure each visit does not exceed $75 OOP?  That would be a GHP reimbursement of medical expenses in my opinion.  I know it feels different because the provider is also the employer, but I don't see how that changes the basic concept that reimbursement of a medical expense creates an ERISA GHP.

Here's an overview:

https://www.newfront.com/blog/addressing-employee-health-plan-exception-requests-part-vi

Specific Expense Payment Exceptions: Requests for Employer to Reimburse Outside the Plan

Although many employers expend a great deal of time, effort, and money to maintain group health plan offerings for employees, there will always be at least perceived gaps in coverage where employees believe the plan does not provide sufficient benefits. This will often create situations where an employee requests that the employer pay for or reimburse a specific medical expense that was not covered by the group health plan.

Common examples of situations where an employee will request reimbursement of a medical expense outside of the formal ERISA group health plan include:

• Services not sufficiently covered by the group health plan (e.g., infertility expenses, abortion travel expenses, gender dysphoria expenses, mental health expenses, autism-related expenses);
• Cost-sharing under the group health plan (i.e., deductibles, copays, coinsurance);
• Items and services not covered by the group health plan;
• Out-of-network provider costs under the group health plan;
• High-cost pharmaceuticals;
• Individual policy premium costs for part-time or out-of-state employees;
• Medical wellness expenses outside a wellness program integrated with the group health plan.

Reimbursement of the Medical Expenses Creates a Group Health Plan

Reimbursement of Internal Revenue Code §213(d) health expenses creates a group health plan, which would trigger the full array of group health plan laws (ERISA, COBRA, HIPAA, ACA, HSA eligibility, §105(h), etc.).  Therefore, employers should avoid providing reimbursement for any §213(d) medical expenses outside of the group health plan unless it is part a HRA or wellness program that is integrated with the health plan.

IRS Publication 502 provides a useful summary of expenses that qualify as §213(d) medical expenses.

[waid10]

Hi Brian - I received more clarification. I can better explain this. The employee does not receive any reimbursement for cost sharing. The employee will pay whatever cost sharing they are required under their insurance. After that, if there are PT services that are provided and are not covered by insurance, the employer will only charge a max of $75 per visit. So it is possible that an employee will have deductibles, copays, coinsurance that exceeds $75. The employer won't get involved with that. The only place where the employer will provide a discount is for PT services that are not covered by insurance. I could see where this is a follow up visit, etc. 

Any ERISA impact?

[Brian Gilmore]

Oh ok.  That sounds fine to me from an ERISA standpoint.  I don't think that creates GHP issues.  But you probably want to think through the qualified employee discount fringe benefits rules in §132(c) for potential tax issues.