Employment Law Blog

News, trends and analysis in employment law and HR

Mar 16, 2015

IRS gives small employers a break for paying individual health insurance premiums

Employee BenefitsHealth Care Reform 

Although the IRS has stated that reimbursing or paying the premiums for employees’ individual health insurance violates the Affordable Care Act (ACA), the agency is temporarily cutting some slack for small employers.

Although the IRS has stated that reimbursing or paying the premiums for employees’ individual health insurance violates the Affordable Care Act (ACA), the agency is temporarily cutting some slack for small employers. According to IRS Notice 2015-17, employers with fewer than 50 full-time or full-time-equivalent employees who reimburse or pay for medical insurance premiums for individual health coverage or Medicare Part B or Part D coverage through June 30, 2015, won’t have to pay an excise tax. Beginning July 1, 2015, the IRS will get tough and impose the tax, which may be up to $100 per employee per day. As we previously reported on June 5, 2014 and December 18, 2014, the ACA requires group health plans to meet certain standards, such as prohibitions on annual limits for essential health benefits. Reimbursing or paying for individual employee insurance plans is a sort of group health plan, but there’s no way to make it comply with the ACA. Talk with your benefits adviser if you need to find an alternative approach to provide group health benefits for workers.

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