If you have under 50 employees, you must provide group healthcare coverage or provide NOTHING at all related to health insurance … If you provide any type of stipend or reimbursement then you could be penalized $100 per employee per day…
Since the enforcement of the Affordable Care Act, many of our small business clients have been asking us whether they can continue to reimburse their employees for health insurance coverage or provide a stipend to employees for use towards purchasing insurance coverage. It is not required to provide group health insurance coverage for employers with under 50 employees, but if you decide to be a nice employer and provide a reimbursement plan or Employee Payment Plan (EPP) then you might be violating the ACA standards. Wait, what??? If you violate then you could be subject to a $100 penalty, per day, per employee under Section 4980D. That is $36,500 per employee per year. And yes, that penalty can be applied beginning with January 1, 2014. How does this make sense? You’re not required to provide group coverage, but if you provide a reimbursement plan or EPP then you could be fined? Wasn’t ACA supposed to benefit employees?
Read this helpful article from Forbes for the justification behind this rule… Feel free to message us or call with questions for guidance.
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