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On-Site Clinics and ACA Ban on Annual/Lifetime Caps


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Assume an employer did not offer a group health plan, but was interested in purchasing access to a health clinic for its employees and their families. This clinic is not located on the employer's premises, it offers an array of primary care services, and will be shared with other employers.

There is an exception to the ACA requirements for "on-site medical clinics," but that term does not appear to have been defined by the regulators or courts. Because of the scope of benefits offered (more than minor injuries/illness or first aid), the location of the services (not on employers premises) and the fact they will available to family members, this will be treated as a group health plan. 29 CFR 2510.3-1(c). It also wouldn't meet the requirements to be avoid COBRA obligations. 26 CFR 54.4980B-2, Q&A 1(d). Many commentators seem to hang their hat on the ACA exception for "on-site medical clinics" to open the door to allow this kind of arrangement, but I'm not sure I see it.

Can an employer offer certain essential health benefits through a shared clinic without triggering the ACA rules on caps, preexisting conditions, etc.?

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In 2023, I worked on what those who sell it call a near-site clinic.

The plan was designed under assumptions that the plan does not fit relief for an onsite clinic, and is a group health plan.

That includes provisions about COBRA continuation coverage (102%), ERISA communications, ERISA claims procedure, Family and Medical Leave Act leave, HIPAA privacy, military service, qualified medical child support orders (QMCSOs), and other group health plan provisions.

The employer offers its near-site clinic to all employees (and one’s spouse and children not yet 26). The employer excludes no one based on a preexisting condition. The employer sets no lifetime limit, or yearly limit, on the care provided.

The plan recognizes some covered persons might prefer no coverage beyond high-deductible health coverage. (This can be so even when the employer provides no other group health plan; for example, a spouse and an employee might have health coverage under the spouse’s employer’s plan. And it might matter when a participant’s child has coverage under the child’s employer’s health plan or the child’s spouse’s employer’s health plan) The plan lets each covered person elect against care that cannot be provided within what’s allowed while being limited to only high-deductible coverage.

I added provisions for allocations of fiduciary responsibilities (especially about claims, and for a separate COBRA administrator), a time bar on lawsuits, and an exclusive forum for lawsuits.

The near-site clinic I helped design is for only one employer. A plan for access to a clinic shared with other employers might involve yet more design issues.

Nothing in this is accounting, tax, or legal advice to anyone.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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