Employers that want to “reimburse” their employees for health insurance
In years past, employers would set up agreements with their employees where they would “reimburse” the employees for health insurance that they purchased on their own….basically bypassing the employer from obtaining a Group Health Plan as required by law. These employers may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code. I don’t write this to scare anyone into purchasing a Group Health Plan from us, but to educate them on the fairly new rules of the IRS. I’ve known a couple of employers that have been caught doing this. The penalties were not as stiff as the ones described here, but not cheap either.
Employers can bring on a Group Health Plan, with very little employees enrolling
Once a year, the ACA allows businesses to put together a Group Health Plan with no regard for the number of employees that enroll. There can be 99 employees and if ONE of them wants to enroll, we’re all good! That once a year time is during the month of November, for a January 1 effective date. Many of our groups have taken advantage of this little secret, and are now enjoying the benefits of complying with the law AND being able to deduct this as a business expense. Call us for more details
Other benefits to having a Group Health Plan with an employer
Another benefit to having a Group Health Plan in place is that anything that an employEE spends on Employee Benefits, can be paid for with pre-taxed money. With the simple installation of a POP Section 125 plan, the employee saves tax money on what they spend and the employer gets to reduce his Workers Comp liability by lowering the taxable income of employees. A win-win. A second benefit to a Group Health Plan is that the benefits are usually much better with a Group Health Plan vs. an Individual or Personal Health Plan, and there are much more plans and carriers available to choose from.
At Brauer Insurance, use us as a resource. I will answer any of your Employee Benefit questions with NO expectation of doing business.