In an ideal world, most people would own their own health insurance and take it with them as they travel from job to job and in and out of the labor market. Some employers may have better insurance than people can find in the open market. But most employers would prefer to make a cash contribution to help employees pay their own premiums rather than provide insurance directly.
Before there was Obamacare, this is what some employers were actually doing.
They used an account called a Health Reimbursement Arrangement (HRA), providing funds employees could use to buy their own health insurance. These funds were not taxed as income to the employee, just as employer-provided insurance isn’t taxed.
There was always legal uncertainty about this practice, however. Many insurance agents were fearful that if they knew the policies they sold were being purchased with employer money, they could be penalized. So, it was common practice for everyone to act on the principle of “don’t ask; don’t tell.”
Then came Obamacare.
Before there was Obamacare, this is what some employers were actually doing.
They used an account called a Health Reimbursement Arrangement (HRA), providing funds employees could use to buy their own health insurance. These funds were not taxed as income to the employee, just as employer-provided insurance isn’t taxed.
There was always legal uncertainty about this practice, however. Many insurance agents were fearful that if they knew the policies they sold were being purchased with employer money, they could be penalized. So, it was common practice for everyone to act on the principle of “don’t ask; don’t tell.”
Then came Obamacare.
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