Kerr & Wagstaffe Weighs in On Health Insurance Refund Hold-Ups

PHILADELPHIA, PA, September 19, 2012

According to a recent New York Times article, a collection of health insurance providers were ordered to issue "$1.1 billion in premiums returned to policyholders under the Affordable Care Act." At the beginning of this past August, many consumers who purchased their own health insurance policies began to receive rebates from health insurance providers. However, as the article states, the repayment has become more complicated as employers--who contribute to employee's health insurance benefits--are determining the best course of action to return funds to workers. Although the options for companies are diverse, and vary on an "employer-by-employer" basis, "the law gives employers up to three months and considerable discretion to decide how to spend the employees' money, so long as it is eventually used to benefit insurance plan participants." As a law firm specializing in many practice areas, Kerr & Wagstaffe responds to the situation by stating that employers must exercise caution in an effort to avoid legal action from employees.

According to the article, the options of repayment are as complicated as they are diverse. Although many may push for employers to return the money directly to employees, companies must also factor in the amount they contributed to each individual's policy. The New York Times outlines, "Some employers are returning the money directly in paychecks, or planning 'premium holidays' that increase take-home pay, others are weighing different options, benefits consultants said, like reducing next year's premium, or spending the refund on so-called wellness programs that reward workers who lose weight or quit smoking."

Kerr & Wagstaffe notes that employees must remain vigilant in regards to staying informed about policies, as the article explains that the issue has caused areas of miscommunication between providers, employers and employees. In the article, Carina Kleter, a project coordinator at Parsons the New School for Design, comments, "It's confusing, because it almost seems like it's all in the employers' hands and it's up to you, the person who got the letter, to ask your employer about how the money is going to come through."

While numerous human resource departments are currently weighing the options, Helen Darling, chief executive of the National Business Group on Health, states, "Spending the employees' share to reward ex-smokers or dieters in a wellness program is asking for trouble, even if it passes legal muster." Ivo Labar, partner at Kerr & Wagstaffe, responds with similar sentiment of caution, "Employers could face substantial class action liability if they fail to distribute these funds in an appropriate manner."

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Kerr & Wagstaffe is a San Francisco-based law firm that is known for its bold and well-prepared legal representation. The lawyers at Kerr & Wagstaffe are active in a long list of practice areas, including intellectual property rights, patent cases and constitutional law. Together, the attorneys at Kerr & Wagstaffe have worked on a number of landmark cases, some of which have been controversial and of incredible importance within their field. Additionally, Kerr & Wagstaffe helps its clients face common legal battles with confidence.