Ashland Heights Health Insurance Agents

IRS Rules & Guidelines For Employers Regarding Health Insurance Plans

The IRS wanted to consider making additional precise rules and instructions for employers. The intent of these restrictions was to address the impact of employers contributing to employees’ decision to obtain alternate health insurance. The question the IRS posed to itself is:

“What are the consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the marketplace or outside the marketplace)?”

Wraparound Coverage

“Wraparound coverage”, a form of health coverage that is not subjected to the ACA rules that employers may help employees obtain starting in 2015 without being fined, is another option. This is basic health insurance that can be used to fill in the gaps of a regular health plan that meets ACA standards. However, the cost of providing this coverage to your staff cannot exceed 15% of the basic health plan that your employees are already covered under.

If you still want to get away from your staff and their health insurance coverage, you may avoid the “employer payment plan” penalties by simply giving them a raise large enough to cover the cost of their benefits to the degree that is desired and feasible. Keep in mind that you will be subject to higher payroll taxes, and since this income is taxable to employees, the amount of the raise they’ll have available to purchase health coverage will be reduced by their increased tax burden. Workers might also forget why they were paid more in the first place, and start to consider themselves employees of a firm that does not respect its employees enough to provide health benefits.

Finally, if you are large enough to be affected by the ACA’s employer mandate, you won’t be able to get out of paying the penalty for failing to offer health coverage.