Articles & Alerts
Does Your Firm Help Employees Pay For Health Insurance Coverage?
If your firm sponsors a Health Reimbursement Account (HRA) or otherwise compensates employees to mitigate health care costs, a substantial penalty may apply.
To our Clients and Friends:
Many employers wish to ease the financial burden that paying for health insurance coverage places on employees.
To do so, the firm may sponsor an HRA, or increase compensation specifically to help offset health care costs.
The Patient Protection and Affordable Care Act of 2010 (“ACA”) imposes a series of monetary penalties on employers that are required to offer a designated level of coverage, but do not.
Through a quirk in the ACA legislation, employers offering alternative compensation such as HRAs to help employees reduce health care costs are subject to penalties of $100 per day, per employee, up to a maximum of $500,000 per year. In many cases this far exceeds the penalty for not offering employees any health benefits at all.
If your firm is at risk, relief may be in sight. Currently there is bipartisan legislation in Congress that is intended to rectify this inequity. Currently, however, there is risk. To reduce it, the options are to (1) terminate the HRA or other compensation currently offered to assist with health care costs, and / or (2) establish a group health insurance plan that complies with the Affordable Care Act. This may be a good time to review your firm’s health care approach.
To find out more about the Affordable Care Act and how it affects your firm, please contact your Anchin Relationship Partner or your employee benefits plan administrator.