For employers who have 49 or less employees, no, you are not required to offer health insurance. But finding an insurance carrier with reasonable rates may prove harder than expected. Because of the unfavorable rates for small groups, many of these employers with generous hearts are stuck in limbo. Now they’re asking, “Can I reimburse employees’ individual health insurance?”
Yes, employers are able to reimburse employees for their individual health insurance tax-free if a Section 105 reimbursement plan is formally set up and administered.
Tax-free reimbursement of individual health insurance is allowed under Internal Revenue Code (IRC) Section 105, IRC Section 106, IRC Section 213(d), and IRC Section 162.
Affordable Care Act Reforms
The passage of our Patient Protection and Affordable Care Act, also includes several reforms to Section 105 medical reimbursement plans.
Such as, of January 1, 2014, all Section 105 medical reimbursement plans must be designed to comply with PHS Act 2711 (annual limit requirements) and 2713 (preventative care requirements).
To meet these requirements, employers may set up a Section 105 plan structured to reimburse:
Health insurance premiums up to a specified monthly amount, and
Basic preventive care as required by PHS Act Section 2713
If you have additional questions regarding Health Reimbursement, or setting up a section 105 plan, please reach out to us to answer more specific questions.