Employer Payment Plans Now a “No-No”
If you are currently paying the premium for an employee’s individual medical policy (Employer Payment Plan) you will want to read this post.
If you are unsure if you are involved in an Employer Payment Plan well here’s a couple of examples: 1.) Your company does not have employer group health coverage available and you, the employer, are paying either through bank draft, check or company credit card for an employee’s individual medical premiums. Or 2.) If you, the employer, reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy you are involved in an Employer Payment Plan.
Employer payment plans and certain other employer health care arrangements are considered group health plans that do not comply with key market reforms of the Affordable Care Act (ACA), including the annual dollar limit prohibition and preventive services requirements.
Employer payment plans reimburse, or directly pay, the premiums for an employee’s individual health insurance policy
Because employer payment plans are generally considered group health plans that do not comply with certain market reforms of the Affordable Care Act, employer payment plans are subject to a $100 per day excise tax per applicable employee under the federal tax code.
Transition relief from the excise tax was available to small employers sponsoring employer payment plans only through June 30, 2015 (generally those with fewer than 50 full-time employees, including full-time equivalents). Such employers may now be liable for the excise tax.
What you can do
Increasing an employee’s compensation, without conditioning the payment of the additional compensation on the purchase of health coverage (or otherwise endorsing a particular policy, form, or issuer of health insurance), is generally not considered an employer payment plan and is therefore permissible.
If you have questions on this or any other topic regarding health insurance give me a call at 479.434.6556.