Monday, August 24, 2015

Think twice before directly reimbursing employee for health care costs.

The IRS will penalize small businesses $100 per day if they "reimburse employees for the cost of premiums for individual health insurance polices or pay their health care costs directly".  The maximum penalty is $36,500 per year.  The new rule became effective on July 1.  The Mississippi Department of Insurance provided the documents posted below that explain the new rule and its ramifications. 


Anonymous said...

Who does this in the 1st place?

Anonymous said...

What's the basis for this rule?

Anonymous said...

Because employers aren't providing supplied health plans, the law punishes those that simply reimburse employees for expenses. It's designed to get employers into the group plans. And if, after they do, they continue to pay expenses, the employer will be taxed for a Cadillac plan. So there is no paying into a HSA to deflect expenses without a penalty.

Andy Arthurson said...

Immediately contact your CPA. There is probably a "grace period" for complying and/or safe-harbor provision to allow the employer to "recoup" incorrectly-paid expenses.

Anonymous said...

Gallo and Supertalk Radio run lots of ads from Morgan-White Group who will answer ACA questions. They have a seminar this Thursday at the Ag Museum.

Anonymous said...

So, not only does Obamacare dictate that we have to have insurance or be fined, now it is dictating what employers may choose to do for the benefit of their employees?

Question of the day: What part of socialism is missing here?
Answer: None.

Put This Shit To The Test said...

Would be very surprised if this heavy-handed government intrusion is supported by the U.S.Constitution. Only way to find out is to put the ball in the Obama Court's court.

If an employer can reimburse an employee for business expenses (use of car, meals, uniforms, etc) I'm betting the ranch the courts would allow the employer that same right regarding insurance premiums.

Anonymous said...

Meanwhile the Republicans in Congress talk tough then tuck tail and whimper away on vote after vote. It all ends badly for your children and grandchildren.

Anonymous said...

Wow, 12 hours until the dimwit brigade showed up.

Anonymous said...

Wow, 12 hours until the dimwit brigade showed up.

Your math is off. From your timestamp it is clear that you didn't show up until 16 hours after this item was published.

Anonymous said...

I feel certain that one of you is an expert and can correct me on this. It seems to me that what they are trying to say is that only contributions to an approved health care plan will qualify for a tax deduction. Obviously you can pay your employees more money and they can use that money for insurance or anything they wish. The problem comes in when you attempt to claim this pay as non taxable. The socialists are saying that only contributions to an approved plan can be used as not taxable. I feel certain that a business with fewer than 50 employees could drop it's insurance coverage and use that money for raises, it's just that those raises would be taxed like any other pay.
From the very first day it was mentioned it was easy to see that this law would be a total disaster for the country. And it is. It will only get worse. It needs to be killed ASAP.

Troop Strength said...

7:30 seems to be a legion of one. That simply cannot be a brigade.

I Can See Clearly Now said...

Employers have forever compensated employees for expenses by increasing their pay, even if for that one month, and 'taxing it up' to cover the taxes.

But, the larger point(and illegal part) is the government telling an employer what it can or not do with employee benefits and reimbursements. The Obama train is off the tracks and it's creating deep, dangerous ruts all throughout the countryside.

And when Hillary gets in the big chair, it will get three times worse.

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