Posted on 06/30/2015 12:37:57 PM PDT by Nachum
Small businesses that reimburse employees for the cost of premiums for individual health insurance policies or pay their health costs directly will be fined up to $36,500 a year per employee under a new Internal Revenue Service regulation that takes effect July 1, 2015.
According to the notice, an employer arrangement that reimburses or pays for employee individual health premiums is considered to be a group health plan that is subject to the $100 per-employee per-day penalty. The penalty applies whether the reimbursement is considered a before-tax or after-tax contribution.
Its the biggest penalty no one is talking about, said Kevin Kuhlman, policy director for the National Association of Independent Business. The penalty for compensating employees for healthcare-related expenses is enough to destroy most small businesses. You can read more in this NFIB post, No Kidding: This Week IRS starts Punishing Businesses for Helping Workers Buy Insurance.
The new IRS penalty is more than 18 times greater than the $2,000 employer-mandate penalty under ObamaCare for not providing qualifying health insurance for employees. And employers with fewer than 50 workers are not exempt, as they are from the employer-mandate penalty.
The rule appears nowhere in the Affordable Care Act but was developed by the Obama administrations regulation writers at the IRS. The rule punishes small businesses for providing the only health insurance support many can afford a contribution to help employees pay premiums for their individual or family health insurance policies or to help finance direct payment for medical services.
(Excerpt) Read more at forbes.com ...
You might want to check into the health sharing ministries. They’re exempt from deathcare penalties and cost about half what deathcare policies do.
Actually - the tax status of the check is immaterial. No matter pre or post tax status, the employer giving money to defray health care costs is against the rule. At least, according to this article.
Maybe I’m not understanding the problem here... couldn’t the employer just call it a raise and be done with it? Money is money, no need to explicitly say “this is for your health care” it’s just part of the salary.
Given the current anti-law stance of the courts, would you make that bet?
It’s another example of the IRS undermining the actual law - and SCOTUS just gave a standing ovation (6-3) for the last act.
I am not a tax expert, but I think you're wrong. Business's that give employees an end of year bonus would be penalized.
“. . . regulation writers at the IRS.”
Regulations can be over-ruled — I’m no lawyer, but regulations are easier to change than laws.
IIRC, massive public and House and Senate outcry/pressure can do it.
Since the IRS is on everyone’s shit list, this may not be a big deal.
Same with Philip Morris-a carton a week.
I had read somewhere that the makers of the original Tabasco Sauce gave employees a case a week, IIRC.
A few cases of beer and a cartoon of smokes is awesome, but what in the world can you do with cases of Tabasco sauce ?
And I love the stuff but wow !!
ObamaCare was written so badly that it left this huge hole that the IRS decided to fill all on their own.
I know that they were doing it at least in 2004. After that, not for certain. Watched it going on at their New Hampshire brewery.
Easy way around it. If you're cutting a separate check, then stop. Bump their pay that amount. Yes, it will be taxable, but it will certainly help with the additional costs.
I am not sure it helps... if their pay goes up, their responsibility to pay for healthcare on the exchanges will also go up. Might bump them into a much more expensive bracket on the exchange. Not the same as giving them assistance.
The main thing is that Uncle Sam gets more with the bump in pay than with the insurance subsidy. Might not be a lot per employee but it’s a lot all added together.
I visited that brewery once.
Now you’re talkin and you’ve got it RIGHT IMO!!! Neither the article made it as clear as this comment of your’s has, not any of the prior discussion. I think you have completely pulled the covers of the intended purpose of this IRS rule making.
The problem is if the healthcare stipend is classified as tax free.
If the govt can collect taxes on the “extra” compensation it’s just fine.
As a small business owner, we no longer even talk about health care or insurance or whatever per advice from our tax attorney.
This is a rigid and thoughtless bureaucratic rule
Oh really? Whoda thunk Obamacare would be anything but kind and thoughtful, a boon to all.
I visited the BMW factory in Munich in the 90’s and the assembly line workers were allowed so much beer per day during work. I can’t do the metric thing but it looked like close to a quart.
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