This summer we wrote about an impending issue under the Affordable Care Act (“ACA”) for colleges and universities wishing to provide graduate student employees with a stipend or reimbursement to defray the cost of medical coverage under a student health plan. Though a common arrangement, guidance issued in connection with the implementation of the ACA meant that schools could be subject to severe penalties for, in effect, using a “health reimbursement arrangement” to reimburse the cost of individual (rather than group) healthcare coverage.

Earlier this year, Notice 2016-17 provided temporary relief by indicating that schools would not be penalized for any such arrangements with a plan year beginning prior to January 1, 2017. Last week, the agencies responsible for issuing ACA guidance released further FAQs indicating that this temporary relief will be extended indefinitely (pending further guidance).

This is good news for the many schools that have been unhappy about the options for restructuring their benefit plans in order to avoid penalties. Although the latest guidance does not guarantee a permanent fix, the reasoning contained therein suggests that the agencies are aware that a special rule should apply in the college and university setting. We will continue to monitor and keep you apprised of any further guidance issued in connection with the ACA and its effect on healthcare subsidies in the graduate student employee context.

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Photo of Kellie M. Thomas Kellie M. Thomas

Kellie M. Thomas is co-leader of the firm’s Employee Benefits practice group. Her goal with every client is to provide practical and straightforward advice that breaks down and makes accessible the myriad issues and considerations arising under ERISA, the Internal Revenue Code (including…

Kellie M. Thomas is co-leader of the firm’s Employee Benefits practice group. Her goal with every client is to provide practical and straightforward advice that breaks down and makes accessible the myriad issues and considerations arising under ERISA, the Internal Revenue Code (including Sections 280G, 401(k), 403(b), 409A and 457(b) and (f)), the Affordable Care Act, COBRA, HIPAA, and the various other federal and state laws and regulations affecting benefit plans.

As part of her day to day advice and counsel work, Kellie regularly reviews, drafts and amends self- and fully-insured health and welfare plans; cafeteria plans; qualified and non-qualified retirement plans; employment, consulting, severance and change in control agreements; and stock option and other equity-based compensation plans. She drafts and prepares submissions under the Internal Revenue Service’s Employee Plans Compliance Resolution System and the Department of Labor’s Voluntary Fiduciary Correction Program, and reviews and qualifies proposed Qualified Domestic Relations Orders and Qualified Medical Child Support Orders. Kellie also counsels on corporate governance and fiduciary matters, including the structure and duties of retirement and benefit plan committees.

Kellie also has extensive experience advising on all benefits-related aspects of corporate transactions, from due diligence and transaction document negotiations to benefits integration following a closing. She particularly enjoys building relationships during the transaction process that continue after the deal is done.