Health Reimbursement Arrangement’s (HRA’s) - $100 per day excise tax begins 7/1/15

The Affordable Care Act (more commonly referred to as Obama Care) has been and continues to be a big challenge to understand and implement.  Therefore, many employers are not in compliance. The IRS has recently issued some guidance and transition relief as it relates to certain types of HRA’s, for employers with fewer than 50 full-time equivalent employees. 

HRA’s covered under this transition relief are plans in which the employer either 1) reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy or 2) directly pays a premium for an individual health insurance policy covering the employee.

The IRS has agreed to waive the $100 per day excise tax for these types of arrangements from 1/1/14 – 6/30/15 for employers with fewer than 50 full-time equivalent employees. Beginning 7/1/15, employers who continue with these types of arrangements may be liable for the $100 per day excise tax for non-compliance. Please note, this transition relief does not apply to stand-alone HRAs or other arrangements to reimburse employees for medical expenses other than insurance premiums and therefore the excise tax may already apply.

If you have questions regarding these types of arrangements and would like to discuss further please contact us.