Under the Affordable Care Act, employers that have more than one full-time employee can no longer pay or reimburse for individual health insurance premiums. If you have more than one full-time employee, and you want to provide health insurance, you must have a group plan. Under the law, anyone working 30 hours or more per week is considered full time.
Originally, January 01, 2014 was the date that this rule took effect; however, the IRS just released IRS Notice 2015-17, which delayed this part of the law until June 30, 2015. After this date, penalties of $100 per day per employee will be incurred (that equals $36,500 annually per employee).
To avoid the penalty, you can either secure a group plan or increase salaries to allow employees to purchase their own health insurance premiums, without requiring that the salary increase be used to purchase the health insurance. The impact to the employees is that they will be using after-tax dollars to purchase health insurance.
If you only have one full-time employee, you can still reimburse health care premiums on a pre-tax basis after June 30, 2015.
The law also impacts how health reimbursement arrangements (HRA) are treated. If you have questions about how this impacts your church or organization, please contact us.