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Vedder Thinking | News Charles B. Wolf, Philip L. Mowery Comment on Affordable Care Act in New York Times

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Shareholders Charles B. Wolf and Philip L. Mowery were quoted in The New York Times today in the article titled “Is Dividing a Company the Way to Beat the Affordable Care Act?”

The article focuses on a particular strategy being contemplated by employers to try to avoid or minimize the impact of health insurance coverage mandates that become effective in 2014 under the Affordable Care Act. This strategy involves splitting the employer into two companies, one for management and one for the rest of the workforce, and providing health care benefits at one company and not the other.

Mr. Wolf and Mr. Mowery cautioned that when employers are formulating business strategies, they need to be aware of both long-standing nondiscrimination rules relating to self-insured health plans and new nondiscrimination rules under the Affordable Care Act relating to insured health plans (and the interplay between the two).

Mr. Wolf stated “If the plan is self-funded, and if the effect of it is that the highly paid get the Cadillac deal and everybody else gets the Ford,” he says, “that’s not going to work. The executives are going to get taxed.”

Mr. Mowery added “I don’t think it will be possible for a company to keep its corporate or senior management in one company and the rest of its workforce in another company and still provide tax-advantaged benefits to the senior management.” Expanded nondiscrimination rules created by the Affordable Care Act, he said, make it clear that the IRS is committed to enforcing the nondiscrimination rules for both insured and self-insured plans.


Philip L. Mowery