Congress eliminated an IRS penalty on small businesses that was devastating to those that incurred it. On their own volition, the IRS decreed that any small business that reimbursed their employees for health care premiums could face a $100 per day per employee, up to $36500 a year.
There are few small businesses that could take a hit like that. Note that the penalty wasn’t part of the Affordable Care Act (ACA). This was a fine the IRS wizards took upon themselves to initiate with no regard to consequences. Their rationale was that such reimbursement plans couldn’t be integrated with individual policies to meet market reforms required by the ACA. So, a business tries to help their employees and gets a huge fine, or even forced out of business, for doing so.
As always happens with tax law, there was relief for a few through the use of medical reimbursement plans and we helped some of our clients navigate that bureaucracy so that they could continue to offer this benefit to employees.
Finally, this last Wednesday, Congress eliminated that penalty. The legislation can be seen in Section 18001 of the 21st Century Cures Act.
Let’s hope for more good news for small business and their employees. Maybe more people can get back to work.
AFS – use the best for less