Stop Reimbursing Health Expenses

published April, 2015

One of the tricky bits of the Affordable Care Act is that you may not “just reimburse some expenses” for your employees. If you have been doing that in the past, stop now. (Actually you have a ‘grace period’ until the end of June.) If you reimburse some medical expenses for employees, you have a “non-qualified health plan.” If you reimburse part or all of an individual health plan, you have a “non-qualified health plan.” If you have a COMPANY health insurance plan, you’re good. If you have NOTHING, you’re good.

If you have a “non-qualified health plan,” past June 30th, there is a penalty. It is $100 per employee per day.

If you’ve been reimbursing some employees for some medical expenses, stop now. Give notice to everyone, something like “our plan is terminated as of May 31st.” It has to be a company-wide plan, or nothing.

If you’re a greater than 2% Shareholder of your own S corporation, you may still have health insurance for yourself.

More details can be found in IRS Notice 2013-54. This was further clarified in IRS Notice 2015-17.

Oh, and the rules are different if you have 50+ “full time equivalent” employees.