IRS Clarifies Rule on Individual or Exchange Coverage for Employees
On May 16, 2014, the Internal Revenue Service (IRS) issued a FAQ response to clarify whether employers can provide added compensation to employees, so they may purchase individual health coverage.
The IRS FAQ answer says it is illegal for an employer that does not establish health coverage for employees to simply pay for individual coverage through a qualified health plan or a state marketplace (or the federal marketplace). It is also illegal for an employer to provide added cash compensation to an employee to pay for individual coverage.
An employer that takes part in such an arrangement will be subject to an excise tax of $100 per day or $36,500 per year per employee.
You can link to the full IRS FAQ here.
To learn about group health coverage options, please contact a member of the Rico, Pfitzer, Pires and Associates Employee Benefits Team!