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ACA Changes Employer Health Plan Reimbursement Agreement

Employers can no longer reimburse health insurance premiums without penalty.

The Affordable Care Act is rapidly changing employer health insurance policies. In many situations, it may be less expensive for an employer to reimburse employee paid insurance premiums rather than establish its own insurance plan. Under IRS Notice 2013‑54, such arrangements are described as employer payment plans

Regardless of the economics, an employer may not reimburse its employees for premiums they pay for health insurance in a tax-free manner. This includes insurance obtained through qualified health plans both within or outside of the Marketplace.

Notice 2013‑54 also clarifies that employer payment plans cannot be integrated with individual policies to satisfy the new rules.

Employers who maintain such an arrangement fail to satisfy the ACA market reforms and may be subject to a $100 a day excise tax per applicable employee.

If you'd like to learn more, contact H&J CPA and we will help your company navigate the new policies introduced by the ACA.