Small Employers: Requirements for Premium Reimbursement Penalty Relief

February 18, 2015

in Compliance, Health Care Reform

The IRS today released Notice 2015-17. In the Notice the IRS provides limited penalty relief to small employers (under 50 FTE) who are using certain premium reimbursement plans that the IRS had previously indicated violate the Affordable Care Act. The Notice does not change the IRS’ position with respect to Premium Only Plans. However, it does grant a grace period for 2014 and part of 2015 for small employers that use certain types of premium reimbursement arrangements to pay for individual coverage on the exchange, among other things. The relief from filing a form to report themselves and from paying the penalty ends June 30, 2015.

IRS Release is Not an Approval of Premium Reimbursement

Purveyors of these products will likely trumpet this as a sign that the IRS has approved their product. Nothing can be further from the truth. In the Notice, the IRS is simply stating that penalties won’t be assessed against small employers (under 50 fte) who sponsor them until July 1 of this year.

Increasing Employee’s Pay – Not Tied to Premiums

The Notice also confirms that paying employees more and not tying those payments to health insurance premiums does not violate federal law. A more complete assessment will be released soon.


Peter Marathas Employee Benefits Compliance DirectorPeter J. Marathas, Esq.
Heading both the Employee Benefits Practice in Proskauer’s Boston office and Proskauer’s Health Care Reform Task Force.
Legal & Compliance Director, Benefit Advisors Network

This post is a service to clients and friends of Shirazi Benefits, a member of the Benefit Advisors Network (BAN). It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.   Benefit Advisors Network and their smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

Other Affordable Care Act (ACA) & Compliance Posts:

Anthem Cyber Attack: Employer Notifications to be Made

Congress Gets to Work by Introducing Bills to Amend the Affordable Care Act

ACA: Overview of 2014 & Looking Ahead to 2015

Post image by:

Previous post:

Next post: