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Fully Insured Group Health Plans May No Longer Provide Discriminatory Benefits

by Patricia Eschbach-Hall
Jones Day - Cleveland Office

Marlene P. Frank
Jones Day - Columbus Office

Sarah Heck Griffin
Jones Day - Los Angeles Office

Kirstin D. Poirier-Whitley
Jones Day - Los Angeles Office

Gary G. Short
Jones Day - Dallas Office

November 5, 2010

Previously published on November 2010

The Patient Protection and Affordable Care Act, as amended (“PPACA”), extends the prohibition against discriminating in favor of highly compensated individuals to nongrandfathered fully insured group health plans, effective for plan years beginning on or after September 23, 2010. This prohibition has long applied to self-insured medical reimbursement plans under Section 105(h) of the Internal Revenue Code (the “Code”). Many employers have used fully insured coverage to avoid the Section 105(h) prohibition but must now reconsider these benefits. This prohibition is implicated in situations as varied as: (i) coverage provided only to management; (ii) management paying a lower premium or receiving benefits in addition to those provided to staff; and (iii) special post-termination continuation coverage provided to management.


The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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