IRS lastest notice provides limited transition relief from the assessment of excise taxes for small employers who reimburse, or directly pay, the premium for an employee’s individual health insurance policy.
An “employer payment plan” is an arrangement under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy, or an arrangement under which the employer uses its funds to directly pay the premium for an individual health insurance policy covering the employee. Employer payment plans are generally considered group health plans that do not comply with certain market reforms of the Affordable Care Act (ACA), and therefore may be subject to a $100 per day excise tax per applicable employee under the federal tax code.
The transition relief applies to employer healthcare arrangements that constitute employer payment plans if the plan is sponsored by a small employer—generally an employer with fewer than 50 full-time employees, including full-time equivalents, as determined in accordance with the “pay or play” rules.
An excise tax will not be asserted for any failure to satisfy the ACA’s market reforms by employer payment plans sponsored by small employers that pay, or reimburse employees for individual health policy premiums (or Medicare Part B or Part D premiums):
- For 2014, for employers that qualify as small employers for 2014; and
- For January 1 through June 30, 2015, for employers that qualify as small employers for 2015.
After June 30, 2015, such employers may be liable for the excise tax. The relief does not extend to stand-alone HRAs or other arrangements to reimburse employees for medical expenses other than insurance premiums.
For more information about Health Insurance or Group Insurance plans in Texas contact Elisa Thornton at 940-382-4700.