Here We Go Again
Yet again, we have additional guidance on health insurance arrangements where employers reimburse employees for individual health insurance policies or pay individual policy premiums directly. These types of arrangements, called employer payment plans, are disallowed by the ACA and are subject to steep excise taxes. In Notice 2015-17, the IRS made some transitional relief available for certain situations:
- Excise taxes will not be asserted on small employers (defined by the ACA as no more 50 full-time and full time equivalent employees) who have employer payment plans until June 30, 2015. After June 30, 2015, such employers may be liable for these taxes. Note that this relief applies to employer payment plans, but doesn’t apply to medical expense reimbursements or HRA’s.
- S Corporation shareholders who own more than 2% of the stock of an S Corporation have relief. Prior tax guidance pertaining to the deductibility of health insurance benefits for such owners conflicted with the requirements of the ACA.
- Prior guidance that providing taxable reimbursements rather than pre-tax reimbursements doesn’t make otherwise impermissible reimbursements permissible still stands.
- Relief was also made available for employers who have reimbursed Medicare Part B or Part D premiums in certain situations.
For more information, see Notice 2015-17.
Special thanks to Kiely Strohmaier for this post.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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