Do You Reimburse Employees For Individual Health Insurance?
If you do, please read this important information. The Affordable Care Act (ACA) will begin impacting employers of all sizes with additional changes in just another week. One of the lesser known regulations that will impact employers relates to offering reimbursements to employees to purchase individual health insurance outside of a company plan. The IRS issued guidance last year (Notice 2013-54) stating that tax-free employer payment arrangements are considered group health plans subject to the ACA restrictions. With a few minor exceptions, these plans fail to meet ACA requirements for a variety of reasons, the most important being that group health plans that are used to purchase coverage in the individual market cannot be integrated with individual market policies. This does not apply if if you only have one participating employee. If you have more than one employee participating in this sort of arrangement, you should consider setting up a Premium Only Plan. Strict penalties may be enforced by the IRS for failure to comply.
Click here to view the Department of Labor FAQ on this subject.