I.R.S. Provides Additional Guidance on Affordable Care Act that Adversely Affects Some Employers

The I.R.S. has recently issued additional guidance on the consequences of employers failing to provide health insurance coverage to employees. Generally, an employer may reimburse  employees’ for substantiated premiums paid by an employee for non-employer-sponsored hospital and medical insurance. In such instances, the payments are excluded from the employee’s gross income. These arrangements are often referred to as “employer payment plans.”

In a recent notice, the I.R.S. has stated that employer payment plans are considered to be group health plans that do not meet the market reforms required by the Affordable Care Act. Further, the I.R.S. has stated that such employer payment plans may subject employers to a $100 per day excise tax per employee. The recent notice does not appear to prevent employers from increasing employees’ taxable wages in order to allow employees to purchase health insurance, but if the employer is a “large employer” under the Affordable Care Act, the employer would still be subject to the “pay or play” penalties for failing to offer health insurance coverage or health insurance coverage that is not deemed to be affordable.

For more information about the Affordable Care Act or any related area of law, please contact Mark Samila at (812) 423-3183 or msamila@KDDK.com, or contact any member of the KDDK Tax and Employee Benefits Law Practice Team.

About the Author

Mark Samila

Mark S. Samila, a Partner at Kahn, Dees, Donovan & Kahn, LLP, in Evansville, Indiana, is a business attorney, Indiana Registered Civil Mediator and Licensed Certified Public Accountant (Missouri) whose practice includes tax and estate planning, financial services including bank and bond financing, creditors’ rights, workouts and bankruptcy and business law. Mark blends his accounting and financial background with his legal experience. In so doing, he provides legal analysis and also understands and considers the business and financial implications of a client’s legal options.

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