According to a recent survey [PPT], health insurance premiums have risen more than three times the rate of workers’ earnings, and more than four times the general inflation rate.  In response, employers are increasingly turning to healthcare delivery methods that, until recently, may have seemed unconventional.  The latest trend is a blast from the past: employers are bringing healthcare directly to the workplace—either by hiring physicians directly or by outsourcing to a medical provider—to provide on-site medical services at the employer’s location.

Providing employee healthcare through on-site and contracted medical clinics appears to be one of the fastest-growing trends in employer-provided healthcare.  The clinics are economical, generally delivering services at a cost advantage over outside medical providers, and employees are more likely to obtain healthcare when needed, because of the convenience of the facility.  The 2009 Kaiser Family Foundation National Healthcare Survey found that 20% of employers with 1,000 or more employees provide an on-site medical facility, and of those, 80% provide health services beyond the treatment of on-the-job injuries. Some employers even permit dependents to receive medical care through the on-site facility.

Employers considering an on-site clinic also should consider the legal issues involved,  including licensing, liability, legal structure for the facility, and of equal importance, the ERISA and related employee benefits compliance implications.  Generally, an on-site medical facility provided by an employer is not a group health plan under ERISA if it provides treatment only for minor illnesses or injuries or first aid for on-the-job injuries (See, ERISA Reg. § 2510.3-1(c)(2)). However, on-site facilities providing treatment beyond these limitations implicate ERISA, and generally make the facility an ERISA-provided health plan. Making the facility available to employee dependents establishes an ERISA plan.  This raises questions of compliance with ERISA’s disclosure, annual reporting, fiduciary, and COBRA rules—as well as HIPAA’s privacy and security rules for health plans, among other issues—all of which trigger the need for legal advice before proceeding.

This entry was written by Russell Chapman.