Smart Benefits: Fines Now In Effect for Small Business Health Plan Reimbursements
Monday, July 06, 2015
Rob Calise, GoLocalWorcester Business/Health Expert
Effective July 1, small employers – those with less than 50 employees – now face fines if they reimburse their employees’ health insurance costs (for plans in or out of the Exchange) in lieu of establishing a health insurance plan for their employees.
Such arrangements, called employer payment plans, are deemed group health plans subject to the market reforms, including the prohibition essential health benefits annual limits and the requirement to provide certain free preventive care, and can’t be integrated with individual policies to satisfy them.
As a result, employers can face an excise tax of up to $100/day per applicable employee for failing to satisfy market reforms under section 4980D of the Internal Revenue Code. The penalty applies whether the reimbursement is considered a before-tax or an after-tax contribution.
The penalties will only affect businesses with less than 50 employees. Those with more than 50 employees are already required to offer a health insurance plan.
Originally, the fines for employer reimbursement were supposed to start last year, but the IRS postponed implementing them until July 1.
Rob Calise is a founding partner of Cornerstone Group, where he helps clients control the costs of employee benefits by focusing on consumer driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate of Bryant University with a BS in Finance.
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WalletHub
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ChiefExecutive.net
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Wallet Hub
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ALEC
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Free Enterprise
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Effective July 1, small employers – those with less than 50 employees – now face fines if they reimburse their employees’ health insurance costs (for plans in or out of the Exchange) in lieu of establishing a health insurance plan for their employees. 
Rob Calise is a founding partner of Cornerstone Group, where he helps clients control the costs of employee benefits by focusing on consumer driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate of Bryant University with a BS in Finance.
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