Posted on 08/31/2015 7:19:00 AM PDT by MarvinStinson
IRS drops a bomb on small employers
» Annual tax would be $36,500 per worker for noncompliance with Obamacare
Employers with fewer than 50 employees were promised a break by not having to provide group health insurance under the Affordable Care Act.
But now the IRS has served notice that under the rule that has been in effect since July 1 such employers are subject to $100 per worker per day excise tax if they help their employees with their health-care costs.
That could amount to a staggering $36,500 per worker annual tax.
“We were told over and over during the Obamacare discussions that if you had less than 50 employees there’s no requirement to provide coverage, so you don’t have to worry about any cost factor,” said Ron Aldridge, Mississippi director for the National Federation of Independent Businesses.
There are about 2,800 Mississippi members in the NFIB and “most of them for sure” have fewer than 50 employees, Aldridge said.
About one in seven of the employers reimburse their employees for medical expenses, Aldridge said.
If a company has five employees, the total tax would be $182,500. A “large” employer with 50 employees that did not provide insurance in compliance with the Affordable Care Act, would be subject to $2,000 per employee, with the first 30 employees exempt, for a total of $40,000, Aldridge said.
The NFIB is backing two measures that have introduced in Congress that would address the situation, he said.
The Mississippi Department of Insurance said in a prepared statement that if the small employer helps employees by paying their premiums, reimbursing medical expenses or raising salaries to compensate for policies bought by the individuals, the company is considered to be in violation of IRS Code Section 4980D.
A statement from the IRS to the Mississippi Business Journal stated that “these employer payment plans are considered to be group health plans subject to the market reforms [under the ACA], including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing.”
The Mississippi Insurance Department said: “The rule appears nowhere in the Affordable Care Act but was developed by the Obama administration’s 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 policies or to help finance direct payments for medical services,” the department said.
The IRS issue comes at a time when the fate of the state-run insurance exchange for small businesses, called One, Mississippi, is uncertain, Insurance Commissioner Mike Chaney said in an interview.
“One, Mississippi has got to be sustainable,” Chaney said. The potential problem is that Aetna is seeking to buy Humana, which is one of the two insurers in One, Mississippi, he said. “If they buy Humana, they may pull out of the state,” leaving only United Healthcare in the pool. If that happens, there is a “distinct possibility” that the state will not be able to find a replacement.
“I cannot see the state of Mississippi putting any money into” the pool “and, politically, I’m not certain that the Legislature will let us put any money into it.” The pool has been propped up by federal grants, Chaney said.
State and federal regulators will meet this week in Chicago to talk with Aetna and Humana. While the state officials will have no official say, the federal regulators will hear their comments, Chaney said.
Aldridge’s take: “Something needs to be done quickly before our No. 1 job creators are left holding the bag and are put out of business.”
Gruberized.
But Obola’s and Hillary’s slaves in their ABCNNBCBS press corpse will never cover it.
Failure is the ONLY option.
The purpose of this is to make sure workers get captured by ObamaCare and not helped by the employer into private insurance.
...who said Scotland and Canada had fabulous government healthcare systems?
Wait till John Boner and Miotch McConnell hear about this! They’ll promise to repeal ObamaDon’tCare root and branch.
Brilliant. Punish employers who help defray the cost of health insurance. Result; fewer workers, fewer employers, fewer benefits. Mission accomplished by the Regime.
Scum EXEMPT Boehner KNEW this
and made $$$$$$$$$$$$$$$ off it.
The simplest and most deserving measure is IMPEACH!
Well if this is true that I am out of business. I will wait for confirmation.
Obamacare it just keeps on giving and giving...................higher bills.
Words fail me. After all the lies, exaggerations and broken promises about Obamacare, nothing surprises me anymore.
http://www.dol.gov/ebsa/faqs/faq-aca22.html
Q1: My employer offers employees cash to reimburse the purchase of an individual market policy. Does this arrangement comply with the market reforms?
No. If the employer uses an arrangement that provides cash reimbursement for the purchase of an individual market policy, the employer’s payment arrangement is part of a plan, fund, or other arrangement established or maintained for the purpose of providing medical care to employees, without regard to whether the employer treats the money as pre-tax or post-tax to the employee. Therefore, the arrangement is group health plan coverage within the meaning of Code section 9832(a), Employee Retirement Income Security Act (ERISA) section 733(a) and PHS Act section 2791(a), and is subject to the market reform provisions of the Affordable Care Act applicable to group health plans. Such employer health care arrangements cannot be integrated with individual market policies to satisfy the market reforms and, therefore, will violate PHS Act sections 2711 and 2713, among other provisions, which can trigger penalties such as excise taxes under section 4980D of the Code. Under the Departments’ prior published guidance, the cash arrangement fails to comply with the market reforms because the cash payment cannot be integrated with an individual market policy.(6)
It’s absolutely true. I had to convince my employer of it months ago and get them to change, or we would have been in trouble.
Had to go with ACA SHOP coverage.
http://www.dol.gov/ebsa/faqs/faq-aca22.html
obummercare - don’tya just love it.
They make it a little complicated, don’t they.
You think that is DELIBERATE?
Hillary says HA HA.
Valerie Jarrett and Soros say HA HA.
The basic action of the left is to make it impossible for the general population to survive financially.
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