In most cases, employers who have a Kaiser Permanente business health insurance plan, may not fund or reimburse their employees for healthcare costs. Why not? At first glance, this seems odd. Why can’t an employer help out an employee who is struggling to pay for medical expenses such as copayments, coinsurance, emergency visits before a deductible is met, etc? You would think Kaiser Permanente would want to encourage such benevolence. However, unless your employees are on an HRA Plan or an HSA Plan, this is not allowed.

Let me explain why. When employers fund or reimburse their employees for medical costs, utilization goes up, meaning members go to the doctor more often, stay in the hospital longer, visit emergency more frequently, etc. This higher utilization drives up costs for Kaiser Permanente as employees use healthcare that may not have been completely necessary. When Kaiser determined rates and pricing for these plans, they calculated them based on the understanding that employers would not fund or reimburse their employees. If some employers were allowed to continue this practice, utilization would increase, and ultimately Kaiser Permanente would have to raise prices for all groups on such plans.

Let me make a recommendation for generous employers who want the ability to assist their employees in this way. Offer your employees one of Kaiser Permanente’s deductible plans with HSA. These plans are government qualified so employees can have health savings accounts. Employers may contribute to these HSA accounts. Ask your tax advisor about regulations on employer contributions to Health Savings Accounts.