Over a year ago, the IRS issued Notice 2013-54 stating that employer payment plans that reimburse an employee for some or all of their health insurance premiums did not comply with Affordable Care Act provisions.
The IRS warned that employers who sponsor such plans would be subject to an excise tax of $100 per day for each affected individual. A new IRS Notice 2015-17 issued last month provides limited transition relief for select employers.
The relief applies to health care arrangements that constitute:
1) Employer payment plans offered by an employer with fewer than 50 full-time equivalent employees (FTEs).
2) S corporation healthcare arrangements for a 2% shareholder employee
3) Medicare premium reimbursement arrangements
4) TRICARE-related health reimbursement arrangements (HRA)
Relief-eligible employers that have employer payment plans are not required to file IRS Form 8928 (regarding failures to satisfy requirements for group health plans) solely as a result of having such arrangements during the relief-qualifying period.
This relief does not extend to stand-alone HRAs or other arrangements to reimburse employees for medical expenses other than insurance premiums. Eligible employers should read the full notice to ensure a complete understanding of the eligible transition relief, tax implications and exceptions.
Below is summary of plan types included in the relief and the duration of relief.
The notice also clarified that an increase in an employee’s compensation will not constitute a group health plan subject to ACA reform, as long as the employer doesn’t condition the compensation on the employee’s purchase of health insurance or endorse a particular health policy.
For more information, contact your Bukaty Companies benefits consultant at 913.345.0440.
As always, we appreciate your business.