American Elephants


Look Out! The IRS is Going After Small Businesses who Help Workers Buy Insurance. by The Elephant's Child
July 2, 2015, 5:15 pm
Filed under: Capitalism, Domestic Policy, Economy, Health Care | Tags: , ,

Female Owner Of Coffee Shop

Some small businesses who reimburse their employees for the cost of the premiums for individual health insurance policies, or who pay their employees heath costs directly will be fined up to $36,500 a year — per employee — under a new Internal Revenue Service regulation that took effect July 1, 2015.

The IRS is considering an employer arrangement that reimburses or pays for employee individual health premiums to be “a group health plan” that is subject to the $100 per-employee per-day penalty. The penalty applies whether the reimbursement is considered a before-tax or after-tax contribution.  This doesn’t sound like it would pass the smell test in the courts.

That penalty is enough to destroy most small businesses.  This rule under which small businesses that get caught helping their workers to buy insurance or pay medical bills —can be fined 18 times more than large businesses that don’t provide coverage at all.

Under the rule, which appears nowhere in the Affordable Care Act, employers who do not offer a group health plan, but give their workers additional pay to compensate for the purchase of health insurance or direct medical expenses can be fined $100 per day, per employee.  Over the course of a year that’s $36,500 per employee up to $500,000 in total.  The penalty on businesses for failing to comply with the employer mandate is only $2,000 per year. …

In fact, according to NFIB research 14 percent of small businesses that don’t offer group insurance reimburse their workers instead.  They think they’re doing a good thing but they’re walking into a minefield.

There is legislation in both houses awaiting action (S. 1697/H.R. 2911).

This seems to fall into the “You Will Obey” category.  The EPA also goes in a big way for enormous fines designed to make people fall into line quickly. I wonder how many owners of small businesses have even heard of this regulation? Typical Obama administration act — force compliance, issue more regulations, and be completely puzzled about why the economy is still in the toilet — but brag about the success of administration policies in the marvelous recovery.  Sigh.


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