Employer Health Care Arrangements

In order to be compliant with the new Affordable Care Act laws, many employers had to begin offering health insurance that met the minimum essential coverage (MEC) requirements to their full-time employees. In lieu of offering traditional insurance, some employers instead came up with employer health care arrangements wherein their employees’ coverage was taken care of, just not in the traditional sense of providing self- or fully-insured plans.

Unfortunately, employer health care arrangements aren’t what the writers of the ACA had in mind when they said, “provide coverage.” Here are a few questions we’ve received regarding these employer health care arrangements:

What if I don’t establish a health insurance plan for my employees but instead reimburse them for the premiums they pay for their own qualified health insurance?
According to the IRS, this sort of arrangement is considered an employer payment plan. Because employer payment plans generally don’t include an arrangement through which the employee may have an after-tax amount applied toward their health coverage (or have the opportunity to take that amount as a cash compensation).

The IRS notice goes on to explain that these employer payment plans are considered to be group health plans subject to market reforms, meaning that they cannot be integrated with individual policies to satisfy the market reforms. If the arrangement cannot satisfy the market reforms, you could be subject to $100/day excise tax per applicable employee.

Is there any transition relief for employers who did offer their employees health coverage through arrangements like an employer payment plan?
Yes. Last February, the IRS issued this notice, which provides transition relief from the excise tax described above. The transition relief applies to employer healthcare arrangements that are:

• employer payment plans sponsored by an employer who is not an Applicable Large Employer (ALE)
• S corporation healthcare arrangements for 2% shareholder-employees
• Medicare premium reimbursement arrangements
• TRICARE-related health reimbursement arrangements (HRAs)

E-filing with ExpressIRSForms
The deadline to e-file your 2015 ACA return was yesterday (June 30). However, if you haven’t filed yet, you can still do so through your ExpressIRSForms account. For questions or help getting started, give us a call at (704) 684-4751 or send us a live chat or an email to support@ExpressIRSForms.com.