For employers with under 50 full time equivalents, June 30, 2015 is the deadline for transitioning employees over to the SHOP marketplace or other insurance that meets the market reform requirements of the Affordable Care Act.
Small employers have often offered health coverage through arrangements that constitute an employer payment plan. Essentially, the employer reimburses the employee directly for the employee’s cost of health insurance or pays the premium directly. These arrangements do not meet market reforms. Transition relief was provided for small employers but this relief will end June 30, 2015.
After June 30, 2015, employers with under 50 full time equivalents will be subject to the penalties under section 4980D. This is $100 per day per employee whose arrangement violates the market reforms.
Applicable large employers (those with 50 or more FTE’s) are already subject to these penalties.
Previously, in February of 2015, we sent out guidance around these reimbursement arrangements and the rules surrounding treatment of these as compensation. Click here to read the article.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.
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