ACA health laws: Some answers to your questions about healthcare reimbursements in 2015
Since many of our clients belong to or run non-profit groups, charities and faith-based organizations such as churches, mission agencies, and more, we are continuing to try and keep you up-to-date on current ACA healthcare laws and how they affect you.
This special report by the ECFA, on healthcare reimbursements, is especially important because many smaller organizations assist their staff and workers by either paying or reimbursing some or all of their healthcare costs in lieu of paying for healthcare or health insurance.
In the past, this type of assistance was encouraged, however, reimbursing or paying employees healthcare costs in this manner is now subject to “penalties up to $100 per employee, per day, per violation for making voluntary healthcare payments on behalf of employees (i.e., for individual policy premiums or for other out-of-pocket medical costs) that do not comply with ACA market reforms.”
These rules and regulations were already in effect, even before 06/30/2015, as are any penalties that will be imposed. If you are not sure if you are conforming to current laws regarding fair practices and the ACA health mandate, please download this report published and distributed by the ECFA designed to help guide smaller organizations and charitable groups under 50 with their health benefits and healthcare reimbursements moving forward.
These penalties apply to both pre- and post-tax payments. Initially, many people interpreted the ACA ruling/guidance as permitting the employer to avoid ACA excise tax problems if they reimbursed the individual healthcare insurance premiums on a post-tax basis. A year later, the government issued additional guidance (“FAQs about Affordable Care Act Implementation – Part XXII” prepared jointly by the Departments of
Labor, Health and Human Services, and the Treasury published on November 6, 2014. See report) clarifying (changing its position) that an employer is not permitted to reimburse individual healthcare insurance premiums on either a pre- or post-tax basis.
We are concerned about many of our smaller groups since employers with 100 or more full-time equivalent employees (FTEs) were subject to the ACA mandate to provide qualified group coverage to employees beginning with their 2015 health plan year, however, the majority of our smaller groups have been exempt from many aspects of the ACA mandated health regulations until this year. (Article continues after image.)
Organizations that qualify for the transition relief rules in IRS Notice 2015-17 didn’t need to file Form 8928 to self-report violations for noncompliant payments or reimbursements made in 2014 or for the first half of 2015 (through June 30, 2015) that paid/reimbursed the cost of individual health insurance policy premiums for employees. Employer with fewer than 50 FTEs that paid/reimbursed health care expenses other than individual health insurance policy premiums do need to file and are not exempt from Form 8928.
There are also certain exemptions listed (See report) that might apply. Special thanks to the ECFA and to attorneys Danny Miller and Allison Gardner of Conner & Winters, LLP for preparing the information included in this resource.
We have many more ACA-related articles and explanation of the new rules and how they apply to non-profit groups, overseas organizations and those with staff partially residing within the USa and partially residing overseas, at https://www.gninsurance.com/aca-ppaca_how_does_it_affect_me/.
Groups and organizations can also check out https://www.gninsurance.com/aca-ppaca_how_does_it_affect_me/affordable-care-act-ppacaaca-workers-overseas-international-group-health-insurance/ or call us toll-free at 866-636-9100 for help.
Background: In February, the IRS issued Notice 2015-17 providing limited transition relief to certain smaller employers from the ACA market reform excise tax penalties until June 30, 2015. The transition relief only applies to
organizations with fewer than 50 FTEs. While payments or reimbursements for the cost of employees’ individual health insurance policy premiums are entitled to relief, other forms of noncompliant healthcare payments or reimbursements (e.g., out-of-pocket medical expense reimbursements under a stand-alone health reimbursement arrangement (HRA) will still be subject to excise tax penalties.