Leaderboard

That's what the instructions say, right?

Perhaps you mean a HSA; but even so, subject to some limited exceptions not applicable here, premiums cannot be reimbursed from an employee HSA. The word is not getting out to small employers about this but, in light of IRS Notice 2013-54 and DOL Tech. Rel. 2013-03 (both issued Sept. 13, 2013), there is really no way for an employer to help employees purchase individual market coverage on a tax-advantaged basis. In addition, while that guidance allows a salary increase, it must not be conditioned on purchasing individual health insurance (in other words, it must be open-ended, leaving the employee free to use the increase for other things); otherwise, the employer will be treated as purchasing the insurance, which is also prohibited even when done after-tax. Employers violating these rules are subject to self reporting of $100-per-day excise taxes on Form 8928, so the adverse consequences are real. Limited transition relief expires June 30, 2015 for certain small employers (generally those that employed an average of fewer than 50 full-time employees, including full-time equivalent employees). [iRS Notice 2015-17 (Feb. 18, 2015)] You should talk to your accountant or attorney (and bring this guidance to his or her attention if need be). Yes, good luck!