I can't believe that ERs can't reimburse EEs for health ins premiums!

[katieinny]

I know I'm very late to the party, but I've been doing some reading on the not-so-new changes regarding the inability of small employers to reimburse their employees for health insurance premiums. The topic just came up at work, so I started looking into it for the boss. I got excited when I read that a cafeteria plan would do the trick, but then that's been ruled out, too?! Since this all started a couple of years ago, it seems no one has figured out a sure-fire way for a small employer to help out his employees aside from adding more taxable money to their income and saying "use it for health care if that's what you want." I feel like I must be missing something. Perhaps I'm not reading the right articles?

[lvena]

IRS set out their rules for this in 2013. I saw a few vendors/administrators hawking their solution to this issue via other avenues, but they always fell flat.

As for reading the right articles, best I can suggest is what I do. I have subscribed to all of the govt sites ( IRS, DOL, HHS) for their email updates. There are a few industry sites (benefitslink and others) that provide articles, and a few law firms for their updates.

Good luck.

[hr for me]

We saw this coming way back in 2010 and changed the way we did benefits for our employees. But yes, it the end it did mean more taxable income to those that didn't pick up the employer insurance (due to spouse's coverage being better for some personal reason) or for small employers that don't offer it at all.

In all my reading, I haven't found any good workarounds.

[Flyboyjohn]

An undercurrent of many provisions and consequences of the ACA is the gov't/IRS effort to cut back on the "tax expenditure" resulting from the tax free nature of employer provided group health insurance.

Since the tax law hadn't changed the IRS figured out a clever way to effectively eliminate employer tax free reimbursement of employee individual health insurance premiums by claiming ACA reform violations and invoking the draconian $100/day/person penalty.

Same thing is going to happen with the excise tax on "Cadillac" coverage, just an indirect way to reduce the tax expenditure.

It's all about the lost tax dollars.

[GMK]

Well said, Flyboyjohn.

[katieinny]

Just so I'm clear -- not only can't the employer help with premium reimbursement -- but neither can the EE put money into a cafeteria plan from his/her wages to pay the health insurance premiums on a pre-tax basis?

[Flyboyjohn]

That's correct Katieinny, a cafeteria plan can't reimburse premiums for INDIVIDUAL health insurance policies, only employer sponsored GROUP policies