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Article Date:
April 2015

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How to Beat the Absurd New IRS Rule on Taxable Reimbursements of Employee Health Insurance

Estimated tax tip savings. This strategy will help you avoid the $100-per-day penalty of the Affordable Care Act.


The IRS just launched its latest attack on your reimbursements of employee health insurance purchased on the individual market—you may violate the Affordable Care Act (ACA) even if you classify the reimbursements as fully taxable wages.


This is part of the government’s continued push to stop employer reimbursement of individual insurance policies. To make sure it has your attention, the government imposes a $100-a-day penalty ($36,500 a year) per employee for violations.


The three government agencies working on this issue—the IRS, the Department of Labor, and the Department of Health and Human Services—want you as a small business to either offer group health insurance or offer no insurance benefit whatsoever.


Nonetheless, you can still increase employee salaries to help them pay for individual health insurance, but you have to do it the smart way. What that means is you must not ... Log in to view full article.

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