Affordable Care Act Avoidance Scheme: If It Looks Too Good To Be True …

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A questionable ACA avoidance scheme has recently come to my attention. The scheme purports to significantly reduce costs associated with ACA compliance by using a so-called Medical Expense Reimbursement Plan or “MERP.” Under this scheme, employers are encouraged to drop health coverage for their employees and adopt a MERP through which the employer helps to fund the employees’ purchase of individual health insurance on the exchange. The scheme has been presented by legitimate-looking organizations as being compliant with the law and is accompanied by a “legal opinion.” We strongly recommend consulting with counsel before adopting such a scheme. It directly contradicts the IRS position on MERPs and puts the employer at high risk for employer mandate penalties.

 


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