Ron Bliss: Reimbursement for health premiums by employers being cut out by IRS ruling
April 28, 2015
Some small businesses have chosen to give their employees an "allowance" to help pay for health premiums in 2015, rather than invest in an employee health plan.
Those businesses with fewer than 100 employees will not be fined in 2015 for not offering an employee health plan. Some, however, so have been helping with the "allowance" to help employees comply with individual provisions of the Affordable Care Act.
But as of June 30, 2015 such an allowance will no longer be allowed.
Such employers must stop the plan as of that date or pay an excise tax to the Internal Revenue Service of $100 per day, per employee.
The IRS views these arrangements as a group health plan subject to the Affordable Care Act coverage requirements. They do not meet the ACA requirement because the annual dollar amount is the amount of the employers' premium payment or reimbursement rather than an unlimited amount.
Small employers who have been using this practice must decide whether they want to increase compensation for employees who have been given this help or if they want to start an employee group insurance plan.
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Many of their employees have been using the Health Marketplace to buy insurance with use of a subsidy. They would be able to stay on their current plans, if the allowance was counted as a pay increase, but would be subject to more taxes.
By starting a group plan, however, the employer would be able to reduce the cost through use of a Section 125 Pre-Tax plan. They could also count it as a legitimate business expense and not make the employees subject to a tax increase.
There is a good chance that the Health Marketplace will allow those in this situation to change plans due to a change in circumstance. If that happens, we can help those affected redo their plans.
If the employer chooses to go the group health insurance plan route, we can also help. We work with Word & Brown of Reno to produce group health plans and can save the company and individuals money through use of a Section 125 pre-tax plan.
Either way, give us a call at 775-450-6769, 775-450-6867, 775-450-7754 or call our office at 775-883-3414. You can also contact me personally at 775-224-7169. There is no charge for our services.
A reminder that you have only until this Thursday, April 30 to sign up for a plan during Special Enrollment Period which is for those who did not have coverage last year and are now being fined under the Affordable Care Act. While the fine last year was a minimum of $95 or 1 percent of your adjusted gross income, this year's fine escalates to $325 per person and $162.50 per child or 2 percent of your adjusted gross income.
(Ron Bliss is a former long-time sports writer who has been selling health insurance the last five years. He is certified on both the Nevada Health Link and through Covered California and can also write major medical policies off the exchanges in both states for those who do not qualify for subsidies. Affordable Healthcare Pros also offers a variety of Medicare supplements and other supplemental health and life insurance plans.)