Reimbursing Individual Health Insurance Policy Premiums May Result in Significant Penalties for Employers
Employers, including municipal employers, have historically struggled to develop a health insurance benefit program for their employees that provides quality benefits and is cost-effective. After the Health Insurance Marketplace opened for business, many employers recommended that their employees use it to purchase individual health insurance policies, with the promise that the premium costs would be reimbursed by the employer. In fact, such employee reimbursement strategies were aggressively marketed to employers as a solution to reduce costs and comply with the requirements of the Patient Protection and Affordable Care Act (“ACA”). Little did these employers (and marketers) know, such arrangements exposed the employers to significant penalties under the ACA.
In September 2013, the IRS issued Notice 2013-54 that made clear that an employer arrangement that paid for employees’ individual health insurance policy premiums on a pre-tax basis violated the ACA. An employer that offered such an arrangement would be subject to a $100 per day per affected employee penalty ($36,500 per year, per employee).
With a business-minded approach, and service-oriented delivery, Mindi helps clients navigate challenges and solve problems in the areas of employee benefits law and health care law. Mindi has spoken and written extensively on employee benefits, health care reform, and health care law topics, and is actively involved in a number of legal, professional and industry organizations focused on these issues.View All Posts by Author ›
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Best Lawyers® 2020
Congratulations to the attorneys of the Health Care practice group at Foster Swift Collins & Smith, PC for their inclusion in the Best Lawyers in America 2020 edition. Firm-wide, 42 lawyers were listed. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation and as lawyers are not required or allowed to pay a fee to be listed; inclusion in Best Lawyers is considered a singular honor. Health Care practice group members listed in Best Lawyers are as follows:
- Gilbert M. Frimet, Southfield
- Richard C. Kraus, Lansing
- Gary J. McRay, Lansing
- Jack A. Siebers, Grand Rapids/Holland
- Jennifer B. Van Regenmorter, Holland
To see the full list of Foster Swift attorneys listed in Best Lawyers 2020, click here.