Additional warnings against reimbursement of employee health insurance

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May 8, 2015 by Tony Novak

I covered the issue of prohibited health insurance reimbursements (as was common in small business employee benefit plans before ACA) several times in this blog, on my own web site and in other publications. The authorities are clear but confusion exists because a few publishers continue to issue self-serving conflicting information.  This article in Employee Benefits Adviser states the important  issues more effectively than anything we’ve read so far:

“The Internal Revenue Service, Department of Labor and Department of Health and Human Services have each issued frequently asked questions stating that employer payment plans (sometimes referred to as premium reimbursement plans) for individual health insurance coverage fail to comply with the Affordable Care Act. Employers that violate this rule are subject to an excise tax of up to $100 per day ($36,500 per year) for each affected employee.”

The most important point is that employers who continue this practice past June 30, 2015 are likely beyond the hope of professional assistance in avoiding fines.

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