Denver Health insurance update
Prior to Healthcare reform, employers were permitted to reimburse an employee for premiums paid by the employee for individual healthcare insurance. This was a tax free benefit for the employee. Healthcare reform changed all that. In September 2013, the IRS issued rule 2013-54(Application of Market Reform and other Provisions of the Affordable Care Act to HRAs, Health FSAs, and Certain other Employer Healthcare Arrangements).
Under the new rule, an employer can still reimburse an employee for the cost of an individual health policy, but beginning in 2014 these are no longer to be made on a tax free basis. The IRS now defines these as group health benefits under PPACA. What this means is that reimbursement must be reported as taxable income on the employees W-2.
This rule applies to individual policies purchased through the state or federal exchanges, pre-tax cafeteria plans or policies purchased outside the exchanges.
Penalty
The IRS has implemented stiff penalties; up to $100 per day for each employee, with a total of $36,500 per year per employee.
Exceptions
Section 105 plans are still permitted for ancillary benefits such as dental and vision coverage, long-term care, and disability coverage, because these are not part of essential health benefits.
Solutions
We can’t change the IRS rules or PPACA, but we can provide options for employers who may need help navigating the healthcare market. We are an independent agency offering real time health insurance quotes and online applications from multiple health insurance companies. We believe in total transparency. Compare options and then apply online from the convenience of your own home or office
DCInsurers Mountain Insurance
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