‘Cafeteria plan’ regs issued, but federal-law conflict feared

Health Insurance Commissioner Christopher F. Koller’s office last week issued regulations on the “cafeteria plans” mandated by a law passed in 2007 for employers with more than 25 employees and an established group health plan that is not self-insured.
The requirement goes into effect July 1, and Koller’s office just created a document that clearly states what the law requires and who is affected.
But in a bulletin about the law, Koller’s office noted that there are questions about the enforceability of the requirement, because “cafeteria plans” allow workers to put pre-tax dollars into accounts to be used for health insurance, health care and related costs.
Such plans are defined by Section 125 of the Internal Revenue Code, but that’s not the only federal law that may apply: As Koller’s team reads it, the Employee Retirement and Income Security Act of 1974 (ERISA), the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the Health Insurance Portability and Accountability Act (HIPAA) all cover the plans.
ERISA in particular, the bulletin notes, preempts “any and all state laws insofar as they … relate to any employee benefit plan,” which these accounts probably qualify as.
“Therefore OHIC is taking a cautious approach with respect to implementing” the state law, the bulletin warns, adding that the office has “construed the requirements of HITI narrowly so as to minimize the possibility of conflicts with federal law and has proposed a regulation consistent with its narrow construction.”
Should the potential conflicts be resolved, the bulletin says, the regulations will be updated.
The bulletin and the regulations are available at www.ohic.ri.gov.