Reply to S/o: reimbursing health insurance premiums no longer allowable per irs

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Reply to "S/o: reimbursing health insurance premiums no longer allowable per irs"

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[quote=webbkathy]Sadly, it is true that only insurance the employer purchase through the SHOP remains non-taxable. If your nanny bought her policy in the individual marketplace, and you reimburse all or part, that reimbursement is taxable income.

From the horses mouth:
http://www.irs.gov/uac/Newsroom/Employer-Health-Care-Arrangements

There was a lot of confusion and push back about this through the early part of the year because the IRS ruling at the end of last year kept referring to large employers. More guidance was issued this fall. However, it applies to ALL employers. The intention was to keep employers from ditching their group plans (get out of offering health insurance) and instead establish a reimbursement plan to provide employees a fixed contribution, tax free, and let them buy what they wanted. Good idea in theory, the practice has in fact meant that small employers who have never had a group plan and have historically provided premium support tax free, can no longer continue on that path legally.

Here is what was clarified in November: http://www.dol.gov/ebsa/faqs/faq-aca22.html

To quote:
"The Departments' guidance further clarifies that such employer health care arrangements will not violate these market reform provisions when integrated with a group health plan that complies with such provisions. [b]However, an employer health care arrangement cannot be integrated with individual market policies to satisfy the market reforms.[/b] Consequently, such an arrangement may be subject to penalties, including excise taxes under section 4980D of the Internal Revenue Code (Code)."

Sorry to be the bearer of bad news.[/quote]

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