In 2014 the Affordable Care Act created some penalties that you might not be aware of for the SMALL EMPLOYER. They were terrible, so terrible that in fact Congress decided to not enforce the penalties for 2014 and in early 2015 said continue what you are doing until June 30, 2015.
Earlier this year Rep. Charles Boustany introduced legislation in the House (H.R. 2911) and Sen. Charles Grassley, in the Senate (S.1697) to remedy the problem. BUT it didn’t happen!
Congress just this week decided on extending some items that expire each year the best known of which regards deprecation. Congress did NOT extend the no penalty issue…..
If you have more than one W2 but less than 50… AND you paid for individual employee health insurance (not a group plan AND this insurance was NOT purchased on the exchange (marketplace)), there is a $100 per day penalty per employee. This is serious, that is $36,500 per employee per year!
This penalty applies whether you pay the individual health insurance directly to the insurance company or reimburse the employee.
This excludes greater than 2% S Corporate shareholders… at least for 2015. We are unclear as to 2016 for greater than 2% shareholders of S Corporations.
It does not matter if the insurance meets the minimum essential requirements of the Affordable Care Act. If it was NOT purchased on the exchange, the penalty applies.
We have no guidance on how this will be enforced.
Many employers have stopped paying for individual health insurance because of this penalty. With their savings they have increased the wages of the employee. You cannot designate it has being for health insurance, it is just a raise.
If this applies to you, please call us to help with the calculations. There is still time between now and the end of the year. Not much time.
Thank you,
Lonnie Young
LYoung@USATaxHelp.com Tel 407.936.2500 x107 Fax 407.936.2501
Young & Company, LLC www.USATaxHelp.com www.IRSTaxTalk.com
Securities offered through HD Vest Investment ServicesSM, Member: SIPC
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