Reimbursement of Employee Health Insurance Premiums (Including S Corporation Shareholders)

A little known and very under-publicized change to the insurance tax laws that took place on January 1, 2014, has exposed employers to a potentially heavy excise tax if they reimburse employees for health insurance premiums vs. enrolling in group plans.  This includes employee shareholders.

Employer reimbursements or direct payment of health insurance premiums for individual policies or coverage under a spouse’s policy may be deemed a group health plan subject to the Affordable Care Act’s (ACA) market reforms if they are made for more than 1 employee.  The deemed group health plan would not comply with the ACA’s benefit mandates for group health coverage and would be subject to excise taxes of $100 per day, per employee with no limit.

While the new […]