Individual Medical Plan Can Incur Excise Tax

The Employers Council on Flexible Compensation (ECFC) recently reiterated and clarified the IRS stance on individual medical plans for employees:

Employers that pay for or reimburse the premiums of individual medical plans for its employees on a pre-tax basis are in violation of IRS regulation.  Any benefit administrator who claims otherwise is subjecting their clients to an excise tax of $100 a day per covered employee, or $36,500 a year. The ECFC issued this release so as to warn employers not to violate regulation, and to dissuade any benefit administrators from marketing any such arrangements that violate IRS regulation.

If you know anyone that is still reimbursing their employees’ individual medical plans on a pre-tax basis, notifying them about this penalty.  It could save them a great deal of trouble.  Or have them call us at (520) 721-4848 and we can help.

What can I do if I lose coverage?

If you don’t have health coverage and you are outside the open enrollment period, you may be able to take advantage of a Special Enrollment Period (SEP) for qualified health plans. Special enrollment periods are available only if you meet certain requirements. However, if you qualify for Medicaid or the Children’s Health Insurance Program (CHIP), you can enroll in those programs at any time of the year—you can begin an application by calling us at (520) 721-4848 and we will let you know whether you qualify and what you need to do to enroll.  Click here to download more on Special Enrollment Periods.