Relief for the $100/Day ACA Penalty
The
IRS issued Notice
2015-17 clarifying the application of Notice 2013-54 to certain situations.
The notice provides relief for employers who are not applicable large employers
(ALES), as defined in §4980H. In summary, the IRS will not assess any penalties
for reimbursement arrangements for 2014 through June 30, 2015. After June 30,
2015, the IRS states they may start assessing penalties. Specifically, the IRS
addresses:
- The
transitional relief through June 30, 2015.
- The
treatment to 2% S corporation shareholders.
- Reimbursing
for Medicare, TRICARE or Medigap.
- Increasing
employee compensation on an after-tax basis in a way that is not tied to
health insurance.
- Treating
insurance reimbursements as taxable wages.
The
IRS confirmed that for the time being, they'll allow an S corporation
shareholder to deduct reimbursed insurance as a self-employed health insurance
under §162 (l).
The IRS has also clarified that treating insurance reimbursements
as after-tax is still in violation of Notice 2013-54; however, the IRS will not
assess penalties for 2014.
Lastly, the IRS clarified that if an employer offers
a group health plan, it may be integrated with a reimbursement for Medicare
premiums without violating the Market Reforms.
Stay
tuned for further guidance as this impacts every business who has reimbursed,
or are currently reimbursing, employees for health insurance.
If
you need further assistance, please contact
me at Kinzey & Arndt, CPA.
