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IRS Grants Temporary Relief to Small Employers

By MarksNelson on March 9, 2015 in Articles, Tax

On February 18, 2015, the IRS issued Notice 2015-17 which granted small employers temporary relief from the excise taxes that could be imposed for non-compliance with the Affordable Care Act (ACA).  The Notice provides the following relief:

  1. Employer reimbursement of employee health insurance premiums.  The IRS had taken the position that an employer’s reimbursement to an employee for their purchase of health insurance constituted an employer payment plan under the ACA, and thus, would be subject to all of the provisions included under the ACA, including the excise tax for noncompliance.  The Notice provides temporary relief for these reimbursement arrangements through June 30, 2015 provided the employer is not otherwise subject to the ACA and has fewer than 50 full-time equivalent employees during the testing period.  This notice includes reimbursements for premiums for individual policies or Medicare Parts B or D.
  2. Employer payment of 2-percent S-corporation shareholder health insurance premiums.  The IRS had determined that if an S-corporation pays for or reimburses for premiums on an individual health insurance policy covering a 2-percent shareholder the payment or reimbursement would be subject to the excise tax under the ACA for noncompliance.  The Notice provides relief from the excise tax for such arrangements through December 31, 2015.  Please note the Notice does not provide any relief for shareholders owning less than 2% or any other employees, unless they meet other exceptions from the imposition of the tax.
  3. Employer payment or reimbursement of employee’s premiums under Medicare Parts B and D.  Prior to this Notice, the IRS determined that an employer payment or reimbursement of Medicare Parts B or D premiums would violate the terms of the ACA if an employer had more than one employee.  The Notice, however, exempts an employer from the excise tax under the ACA for the payment or reimbursement of an employee’s Medicare premiums, subject to certain requirements being met.
  4. Employer increasing employee’s compensation to assist with the payment of premiums on an individual health insurance policy.  The Notice determined that such an arrangement is not a plan subject to the ACA as long as the increase in compensation is not contingent on the acquisition of health coverage.

Please contact your MarksNelson advisor if you would like to discuss this Notice and its potential impact on your business at (816) 743-7700.



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MarksNelsonView all posts by MarksNelson
MarksNelson LLC works with clients to help safeguard and grow their businesses. Our ultimate goal is to help our clients to Move Forward. The firm provides Assurance, Accounting Services and Business Advisory, Business Valuation, Consulting, Cost Segregation, Employee Benefit Plan Audits, Litigation Support, Forensic Accounting, International Tax, State and Local Tax and Tax planning, advisory and compliance services. MarksNelson is a member of The Leading Edge Alliance, the second-largest international professional association of independently owned accounting and consulting firms, serving clients who need additional resources on a national or international level. MarksNelson has significant accounting and business advisory experience in the auto dealership, construction, insurance, manufacturing, distribution and real estate sectors. The firm was named among the 2014 Best Accounting Firms for Leadership Equity by the 2014 Accounting MOVE Project for its dedication to gender equity.