The IRS Says (Again) That Certain Employer Payment Plans Won’t Fly

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affordable-care-act-generic-graphic-hearstThe IRS recently issued two new Q&As to underscore that arrangements allowing employers to reimburse employees on a pre-tax basis for premiums used to purchase individual health coverage, either inside or outside of a public exchange, violate Affordable Care Act’s insurance market reforms. While duplicative of previous IRS publications on the subject, these Q&As are in plain English.

This rule applies only to individual premiums and not to pre-tax plans like HRAs and FSAs.

To drive the point home, the IRS notes that employers offering such an arrangements will be subject to a $100/day per covered employee penalty.

 

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Published In:

FSA
HRA
IRS
Tax

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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