Health care reform
The IRS recently announced transitional relief for standalone Health Reimbursement Arrangements (HRA), effective until June 30, 2015, allowing small employers to subsidize employees who buy individual health coverage without facing an excise tax penalty. PPACA subjects small employers to a tax if they offer an "employer payment plan" — in which an employer pays for, or helps an employee pay for, an individual health policy.
The IRS delayed the requirement "because the market is still transitioning" and because the transition to "other alternatives will take time to implement." The IRS notice also exempts employers that do offer an employer payment plan during this period from submitting IRS Form 8928. This form is used by employers to report that they have failed to meet the requirements related to employer payment plans.
This delay does not apply to large employers (those with 50 or more full-time-equivalent employees). Large employers are subject to a fine of $100 per day for each employee who receives premium reimbursement or a subsidy from the employer to pay for individual coverage.
Small employers that have been struggling to modify their plans now have four additional months before they must adhere to this rule.
Employees — at small employers — who have been benefiting from employer payment plans can continue to do so through June 30. At that point, one of two things will happen: The employer will stop offering the plan or will switch the employee to a plan that is allowable under PPACA.