Do you reimburse employees for individual health insurance policies? If you do, then you may be in violation of recently issued IRS guidance. Up until now, it's been unclear whether such a practice is in compliance with the Affordable Care Act (ACA). The IRS and Department of Labor (DOL) interpret that a business engaging in this practice is actually creating its own group health plan. A group health plan must not provide an annual limitation on benefits. The amount paid for insurance is deemed to be the annual limitation; thus it would fail the requirements.
Although such an arrangement is still considered tax-free, it's subject to a penalty because it fails to meet certain group health plan requirements. This penalty imposes an amount of $100 per day, per participant.
If you have any questions, let us help you make sure that you are compliant with all the rules and regulations. Especially since in today's environment they are changing rapidly.