June 30 Extension for Medical Insurance Penalties Rapidly Approaches
Small employers received some relief this year when steep penalties for employer payment plans were extended to June 30, 2015. These $100 per day per employee penalties apply when employers pay for or reimburse an employee’s individual health insurance premiums rather than provide employer sponsored group insurance. All employers were originally expected to comply by January 1, 2014, but transitional relief granted small employers (less than 50 employees) an extension through June 30, 2015.
I would like to say that I am not one bit concerned that this extension period gave farmers and other small businesses time to comply with the rules. But we still get calls and questions from a lot of misinformed people who don’t understand these rules. I often find examples are key in explaining these regulations.
Example #1: Yellow Brick Road Farm, Inc. employs 8 full-time employees. They offer a group health insurance plan through Farm Bureau. Group insurance is an acceptable form of health insurance to provide relative to these penalties.
Example #2: Red Brick Farm, Inc. employs Farmer Brown, and his 3 full-time workers. Farmer Brown finds that it is more expensive to provide a group plan through Red Brick Farm than it is to let each of his employees go find a plan that they like and that fits each of their individual needs. It seems like a win-win for Farmer Brown to let his guys go out and enroll in an insurance plan and he will just pay the premium for them or reimburse them if they pay it. This is a NON-COMPLIANT employer-payment plan… subject to $100/day per person penalties!
Of course, there are always a few exceptions. But the take-away for today is you have just a few more days to get informed if you are still out there offering these types of plans.
Kiely Strohmaier Kiehn, CPA
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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