Congress Eliminates IRS Penalty on Employer Reimbursements for Health Insurance

December 8, 2016

December 7, 2016: Michael Cohn reported in Accounting Today online:

The [US] Senate passed legislation Wednesday eliminating a tax penalty on employers who reimburse employees for the cost of health insurance premiums, following passage of the measure last week in the House.

The IRS began enforcing the penalty on employers last year, even though it isn’t part of the Affordable Care Act. Employers who violate the rule can be fined up to $100 per day for each employee, or up to $36,500 a year, which is 18 times more than the penalty imposed on larger employers that don’t offer insurance to workers.

Under Section 18001 of the 21st Century Cures Act, business owners would be permitted to compensate employees for the cost of individual insurance premiums or medical visits. President Obama has issued a statement in support of the legislation.

Learn more about this and other provisions of the bill at
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