An employer clinic (sometimes referred to as onsite or worksite clinics) historically provided care to employees for on-the-job accidents and first aid. Now, many employers see onsite clinics as a way to reduce healthcare spending, increase productivity, and provide a desirable benefit to employees. Establishing an onsite clinic may have several positive effects, but the benefits offered by the clinic and other clinic design choices can create additional compliance obligations and limit employee eligibility for other benefits.
Employer Clinic in Group Health Plans
Group health plans can be subject to a range of federal laws, including ERISA, COBRA, HIPAA, and the ACA, in addition to various provisions of the Internal Revenue Code and Treasury Regulations. Clinics limited to only providing first aid and care for workplace accidents or illnesses generally would not be subject to these laws; however, most employers considering including an onsite clinic into their overall benefit package will want the clinic to provide additional services. Therefore, it is imperative that employers work with their clinic provider to understand what benefits will be offered and what compliance obligations are associated with those benefits.
For example, if the clinic provides medical care beyond treating workplace injuries, has the employer adopted and issued a summary plan description for the clinic (or incorporated the clinic into the employer’s existing wrap document), and accounted for the clinic on the plan’s Form 5500 annual reporting? How will COBRA be administered with relation to the clinic? None of these questions should be the deciding factor for or against offering an onsite clinic benefit, but an employer should consider what, if anything, they need to have in place for compliance purposes prior to offering the benefit to avoid potential regulatory inquiry or penalties in the future.
Clinics and HSAs
Even after considering the above compliance issues and the logistics of siting a clinic and choosing care providers, employers should pause before implementing a clinic if they also offer HSA-eligible health plan options. Employers are responsible for determining how employer-sponsored benefits will affect employee HSA eligibility. IRS guidance indicates that an onsite clinic offering “significant” medical benefits to employees on a free or reduced-cost basis can result in employees with access to the clinic losing their HSA eligibility (despite still being enrolled in a high-deductible health plan).
Certain clinic benefits, such as preventive care including physicals and immunizations, providing over-the-counter medication, and treating worksite injuries, will not jeopardize employee HSA eligibility. Conversely, providing inpatient or outpatient medical procedures, otherwise typically provided at hospitals or retail clinics, to employees for free would clearly constitute “significant” medical care.
Of course, the employer could avoid this issue by requiring employees with HSA-qualifying coverage to pay the full cost of clinic services until they satisfy the HDHP deductible. This raises additional issues, such as how does an employer calculate the fair market value of clinic medical benefits? While there may not always be a definite answer, working with an experienced benefits advisor will help employers make the best choice for their overall benefit program and avoid unexpected compliance issues.