The Affordable Care Act (ACA) changed the landscape for small businesses that offered health benefits for their employees.
Before the ACA, many small businesses reimbursed some or all of their employees’ individually purchased health insurance.
The ACA makes that illegal and imposes a $100-a-day, per-employee penalty for such reimbursements without using one of the newer health reimbursement accounts—namely the ICHRA or the QSEHRA.
That brings us to two other choices:
As a small employer with fewer than 50 employees, you can offer no health benefits and face no federal law penalties.
You can use the health savings account (HSA) to help employees with their health benefits without facing the hurdles of the Affordable Care Act.
But here’s the kicker: The one thing you need to consider when you make these contributions is the discrimination rules (which are called “comparability” rules in the HSA world). If you violate these rules, the IRS forces you to pay a draconian tax of 35 percent of your total HSA contributions.
Fortunately, it’s easy to avoid discrimination—even when you favor one group of employees over another—when you follow three simple ... Log in to view full article.