Is it possible that the Cadillac Tax will be a major health spending cost ‘deflator’?
Employers that reimburse employees, whether pre- or post-tax, for individual medical insurance through an HRA or direct payment, please be aware that the IRS has posted several notices indicating that this is not an allowed strategy! In general terms, the IRS is granting reprieve for a number of employers through June 30, 2015 to make proper changes or face potential penalties and excise taxes.
Bestefits has advised against this strategy even though some professional firms have been selling on the concept for years. It was our belief that the ACA did not intend for this loop-hole and that many of those selling on this concept were using a mix-n-match of tax code to argue its viability. As we expected, the IRS provided detailed and direct communication about why this is not allowed and the consequences of not making compliant changes.
If you know an employer who is currently reimbursing for individual medical insurance premiums or considering doing so, please forward this notice and the legal article in this link for their information. We are happy to help them understand the legislation and provide affordable alternatives. There are still a great number of strategies for creating cost-containment of employee benefits while enhancing benefit value.
Related posts
