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IRS Provides Temporary Enforcement Relief for Small Employers Offering Employer Payment Plans


March 2015

The IRS issued guidance providing enforcement relief through June 30, 2015 for small employers who offer employer payment plans to their employees. In the guidance, the IRS reiterated its stance that an employer payment plan—an arrangement where an employer provides pre-tax reimbursements to employees to apply towards the cost of individual health insurance coverage—is considered a group health plan for ACA purposes. According to the IRS, such an arrangement is impermissible, and is subject to excise taxes under Code Section 4980D, unless it complies with the ACA’s market reforms.

The enforcement relief applies through June 30, 2015, to employers who are not considered Applicable Large Employers (ALEs) for ACA purposes (i.e., generally have fewer than 50 full-time employees) for 2014 and the first half of 2015.

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