On May 16, 2014, the Internal Revenue Service (IRS) clarified that it is illegal for an employer to simply pay for individual coverage for its employees in the exchange or in the outside individual market with pre-tax dollars.
There are those who claim there are loopholes available which make this legally possible.
The IRS specifically clarifies that an employer who offers such an arrangement will be subject to an excise tax of $100 per day or $36,500 per year per employee.
Since we are getting questions as to whether or not there are ways of using an HRA or other premium reimbursement, pre-tax strategies for employers to purchase individual coverage for employees we thought the release of this announcement was especially timely.
If you have any questions about benenfits for your employees, please be sure to contact us for assistance.