The 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.