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Post-Tax & Pre-Tax Employer Reimbursement Prohibited


Post-Tax & Pre-Tax Employer Reimbursement Prohibited

Post-Tax & Pre-Tax Employer Reimbursement Prohibited

Posted by on Dec 17, 2014 in Blog News

Agencies Prohibit All Employer Reimbursement of Individual Premiums

Implications, rules, and requirements surrounding the Affordable Care Act have gained a reputation of being complex, confusing, and frustrating. Both business owners and individuals are heavily affected by the requirements of the Affordable Care Act, making it imperative that you understand what you are responsible for.

Unfortunately, an overwhelming number of business owners were recently surprised with a rude awakening. Now, agencies prohibit all employer reimbursement of individual premiums, stating that this move does not comply with the Affordable Care Act. Rather than offering employer-sponsored health plans, employers thought there would be no harm done in reimbursing their employees for their premiums.

Since many were under the impression that penalties are only applied to pre-tax arrangements, it came as a surprise when the Department of Labor (DOL), Health and Human Services (HHS), and the Treasury Departments issued a “Frequently Asked Questions” guidance sheet to clear things up. Employers that treat this form of reimbursement as pre-tax or post-tax may be subjected to penalties. This is news to many, as they assumed writing off these reimbursements as post-tax would allow them to avoid penalties. However, this is not the case.

In order to comply with regulations surrounding the Affordable Care Act, you cannot integrate employer health care arrangements with individual market policies. To avoid penalties and excise taxes under Code Section 4980D, you must comply with all Affordable Care Act regulations and requirements. There are no shortcuts.

Serving Goleta, Santa Barbara, and surrounding cities, contact Brown & Brown Insurance Services of California, Inc., for all of your business insurance needs. Please do not hesitate to give us a call if you are confused about your responsibilities as a business owner. We will identify areas where you are responsible to ensure you are complying with all regulations surrounding the Affordable Care Act.