Obamacare: Highly Compensated Individuals & the Second Amendment

“Prohibition on Discrimination in Favor of Highly Compensated Individuals” is a section found in Obamacare. Within in it is a sub-section protecting Second Amendment gun rights, with respect to wellness and prevention programs. The language appears, on the face, to prohibit the use of any data collection with regard to the ”the lawful ownership or possession of a firearm or ammunition; or the lawful use, possession, or storage of a firearm or ammunition.” However, does this section really provide adequate protection for gun owners, and more specifically our veterans?

The Section reads as follows:


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(a) IN GENERAL.—A group health plan (other than a self-insured plan) shall satisfy the requirements of section 105(h) (2) of the Internal Revenue Code of 1986 (relating to prohibition on discrimination in favor of highly compensated individuals).

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(b) RULES AND DEFINITIONS.—For purposes of this section—

(1) CERTAIN RULES TO APPLY.—Rules similar to the rules contained in paragraphs (3), (4), and (8) of section 105(h) of such Code shall apply.

(2) HIGHLY COMPENSATED INDIVIDUAL.—The term ‘highly compensated individual’ has the meaning given such term by section 105(h)(5) of such Code.”.

(e) Section 2717 of the Public Health Service Act, as added by section 1001(5) of this Act, is amended—

(1) by redesignating subsections (c) and (d) as subsections

(d) and (e), respectively; and

(2) by inserting after subsection (b), the following:    


(1) WELLNESS AND PREVENTION PROGRAMS.—A wellness and health promotion activity implemented under subsection (a)(1)(D) may not require the disclosure or collection of any information relating to—

(A) the presence or storage of a lawfully-possessed firearm or ammunition in the residence or on the property of an individual; or

(B) the lawful use, possession, or storage of a firearm or ammunition by an individual.

(2) LIMITATION ON DATA COLLECTION.—None of the authorities provided to the Secretary under the Patient Protection and Affordable Care Act or an amendment made by that Act shall be construed to authorize or may be used for the collection of any information relating to—

(A) the lawful ownership or possession of a firearm or ammunition;

(B) the lawful use of a firearm or ammunition; or

(C) the lawful storage of a firearm or ammunition.

(3) LIMITATION ON DATABASES OR DATA BANKS.—None of the authorities provided to the Secretary under the Patient Protection and Affordable Care Act or an amendment made by that Act shall be construed to authorize or may be used to maintain records of individual ownership or possession of a firearm or ammunition.

(4) LIMITATION ON DETERMINATION OF PREMIUM RATES OR ELIGIBILITY FOR HEALTH INSURANCE.—A premium rate may not be increased, health insurance coverage may not be denied, and a discount, rebate, or reward offered for participation in a wellness program may not be reduced or withheld under any health benefit plan issued pursuant to or in accordance with the Patient Protection and Affordable Care Act or an amendment made by that Act on the basis of, or on reliance upon—

(A) the lawful ownership or possession of a firearm or ammunition; or

(B) the lawful use or storage of a firearm or ammunition.

(5) LIMITATION ON DATA COLLECTION REQUIREMENTS FOR INDIVIDUALS.—No individual shall be required to disclose any information under any data collection activity authorized under the Patient Protection and Affordable Care Act or an amendment made by that Act relating to—

(A) the lawful ownership or possession of a firearm or ammunition; or

(B) the lawful use, possession, or storage of a firearm or ammunition.

To imply that the healthcare database would not be used in any database is to ignore history and an earlier Executive Order: a) Action #2 Address unnecessary legal barriers, particularly relating to the Health Insurance Portability and Accountability Act, that may prevent states from making information available to the background check system and b) Action #16 Clarify that the Affordable Care Act does not prohibit doctors asking their patients about guns in their homes.

The Brady Handgun Violence Prevention Act of 1993, Public Law 103-159 basically requires the Federal Firearms Licensees (FFL) to request background checks on prospective firearm transferees and that the US Attorney General establish the National Instant Criminal Background Check System. Under this law some military veterans are being denied their right to own a gun ….not for any crimes committed, but because of psychiatric determinations or evaluations based on issues related to PTSD (post-traumatic stress syndrome).

Here are just a few reasons, under the Brady Law, where an individual can be denied, when undergoing a background check: a) 18 U.S.C. §922 (g) (3) Is an unlawful user of or addicted to any controlled substance; b) 18 U.S.C. §922 (g) (4) Has been adjudicated as a mental defective or committed to a mental institution; and c) 18 U.S.C. §922 (g) (6) Has been discharged from the Armed Forces under dishonorable conditions.

Given the above, one conclusion can be drawn –”It does not prohibit the use of a database to determine who has a psychological ‘disorder’ like ADHD or PTSD. And it does not prohibit the ATF from trolling the database for persons with these disorders (independent of any issue of gun ownership) — and sending their names to the FBI’s database of prohibited persons because of any of the reasons stated above under 18 USC §922 (g). Further, HIPAA would not prohibit this ‘law enforcement function,’ and Obamacare has significantly broaden the list of people whose determination is an ‘official’ determination similar to the VA psychiatrists who have disarmed approximately 150,000 veterans.”

Everyone goes to the doctor for one reason or another, so under this law and the Executive Order issued by this administration, questions about guns in the home will be asked of literally every individual in the nation and not just those with “mental health issues.” Kris Zane rightly asks, “What about post-partum depression or other ‘depressive’ disorders? This and PTSD could be easily—but falsely—’proved’ or be temporary issue. What about a child who tells the doctor that mom and dad have been arguing? Would this be considered a ‘mental health’ issue because at any one time any one of us could be categorized as being ‘depressed going through a difficult time in our lives?'”

What has not been discussed in the media is the reference to Section 105(h) of the IRS code and ramifications for employers as well as employees regarding health insurance and compliance.

There are other sections in Obamacare that reference and require fully-insured plans which lose “grandfathered” status comply with the requirements of section 105(h)(2) of the Internal Revenue Code of 1986.

According to a memo from Davis & Harman LLP, titled “New Nondicrimination Requirements for Insured Group Health Plans,” the rules “prohibit health plans from discriminating in favor of “highly compensated individuals.” These rules already apply to self-funded plans, but will now apply to fully-insured plans, which have lost grandfathered status, which went into effect on the first plan year beginning after September 23, 2010.

“The penalty for an employer who sponsors a fully-insured plan which violates these rules is severe,” the memo continues. “They would be liable for an excise tax of up to $100 per day per employee ‘discriminated against.’ Below explains some of the rules and what must be done to make sure their benefits, eligibility, and contribution structure are in compliance.”

Suppose a “highly compensated individual” is promised benefits for life under a self-funded health care plan and he incurs $100,000 of medical costs in connection with an illness. The $100,000 of benefits will be taxable income under Section 105(h). Most lawyers warn organizations that self-insured plans should not create exclusive eligibility rules only for higher-ranking executives in connection with retirements or separation of employment. Under Section 105(h) only highly compensated individuals are subject to the above adverse tax consequences. However, most of these individuals comprise roughly 25% of the workforce, and are usually an employer’s most senior and vital employees.

Section 105(h) defines “Highly compensated individuals (HCI or HCE)” as individuals who are:

  1. one of the 5 highest paid officers,
  2. a shareholder who owns (with the application of section 318) more than 10 percent in value of the stock of the employer, or
  3. an individual who is among the highest paid 25 percent of all employees (other than excludable employees who are not participants).

Benefits Testing: Under the benefits test, all benefits provided to “highly-compensated employees (and their dependents), must be provided for all other participants (and their dependents). In other words, HCEs must not be provided better benefits (or the opportunity to elect better benefits) than NHCEs.”

However, for testing purposes, employers may exclude from testing:

  1. employees who have not completed 3 years of service;
  2. employees who have not attained age 25;
  3. part-time or seasonal employees;
  4. employees not included in the plan who are covered by a collective bargaining agreement, if accident and health benefits were the subject of good faith
    bargaining between the employee representatives (UNIONS) and the employer; and
  5. employees who are nonresident aliens and who receive no earned income (within the meaning of section 911(d) (2)) from the employer which constitutes income from sources within the United States (within the meaning of section 861(a) (3)).

Hopefully, this section protects the rest of us, but I have not been able to get clarification of this since this “entire” section of the Act addresses “highly compensated individuals” and the “exclusion” portion of this section seems to protect “unions” excluding the rest of those individuals that do not fall into the other 2 categories.

I did find this on a BCBS website in South Carolina which relates to what is currently being discussed in the news regarding “grandfathered plans” but this statement is troubling. “Prohibition of Discrimination Based on Lawful Ownership or Possession of Firearms or Ammunition – Plan may not base eligibility, premiums, discounts, rebates or rewards on the lawful use, ownership, or possession of firearms or ammunition, nor may a plan request this information as part of a wellness program or for any use related to the Health Care Reform Act. These prohibitions do not apply to a grandfathered plan.” It’s apparent, the healthcare law is mandating insurance companies drop current healthcare plans, not only to include all the new requirements, but to have everyone bound by this section of the law with the intent of everyone ultimately being included in any database that currently exits under the Brady Act.

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