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Health insurance

Provision of insurance What is the health insurance provision framework in your jurisdiction? For example, is it provided by the government, through private insurers or through self-funded arrangements provided by employers?

Health insurance is generally provided to employed individuals and their dependents through self-funded and insured arrangements provided by employers. Individuals can also purchase their own health insurance policies. Finally, the government provides health insurance for individuals aged 65 and over (Medicare) and to certain low-income individuals or children (Medicaid).

Coverage levels Do any special laws mandate minimum coverage levels that must be provided by employers?

Yes, as a result of the Affordable Care Act 2010 (sometimes called Obamacare), employers with 50 or more employees are required to provide health insurance to their full-time employees. This health insurance must contain specified benefits, at specified levels and at specified not-to-exceed premiums for employees. 

Failure to offer such coverage or violations regarding specified levels of benefits or premium amounts leads to significant non-deductible excise taxes for such employers. Lastly, individuals are also required to maintain specific health coverage or be subject to additional income taxation. These requirements – and associated tax penalties – are at the centre of an intense debate under the new administration and it remains to be seen whether the Affordable Care Act will be repealed, replaced or revised.

Can employers provide different levels of health benefit coverage to different employees within the organisation?

Yes, within certain restrictions. First, as noted above, large employers are now subject to a mandate to provide health insurance. Employers can provide enhanced coverage within their organisations, subject to non-discrimination rules that are designed to prevent discrimination in favour of highly compensated individuals. There are also often different levels of benefits between collectively bargained employees and the remainder of the employee population.  

Post-termination coverage Are employers obliged to continue providing health insurance coverage after an employee’s termination of employment?

Generally no, and the percentage of employers that voluntarily provide such coverage has significantly declined in recent years. However, employers must provide 18 months of continued coverage after the termination of an employment contact to individuals and the families who had health insurance coverage at the time of the termination. 

The full cost of the coverage, with a small administrative surcharge, is paid by the former employee. The coverage may be extended to 29 months if the employee is disabled. Finally, the coverage may be extended to 36 months for the loss of coverage for a spouse due to divorce or a child who turns 26 and is no longer covered under his or her parent’s health coverage. This continued coverage has been in place, with amendments, since the introduction of the Consolidated Omnibus Budget Reconciliation Act (COBRA) in 1986.

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