Tags: small | businesses | irs | fines | helping | employees | health

Small Biz Could Face IRS Fines for Helping Workers With Health Costs

By    |   Tuesday, 07 July 2015 03:34 PM

Small businesses can be fined up to $36,500 a year per employee by the Internal Revenue Service under a new regulation that went into effect on July 1 if they assist their workers with their health costs.

This rule, which does not appear anywhere in the Affordable Care Act, mandates that employers who give their employees additional pay to compensate for medical expenses or health insurance purchases, but who do not offer any group health plan for their employees, will be fined $100 per day per employee, according to the National Federation of Independent Business. That adds up to $36,500 a year per employee up to a total of $500,000 in fines.

“It’s the biggest penalty that no one is talking about,” said NFIB policy director Kevin Kuhlman. “The penalty for compensating employees for healthcare-related expenses is enough to destroy most small businesses.”

The penalty will apply whether the reimbursement is a before-tax or after-tax contribution, according to Forbes, and the fine rises to more than 18 times greater than Obamacare’s $2,000 employer-mandate penalty for an employer who does not provide health insurance for his or her employees.

Some small businesses cannot afford to provide the health insurance plans that Obamacare endorses and, thus, the new fine punishes employers who do contribute to their employees’ premium payments in their own individual or family health insurance policies, according to Forbes.

“It’s hard to believe Congress or the President intended to punish employers much more severely for actually helping their workers,” Kuhlman said, according to NFIB. “Nevertheless, that’s the consequence and most small businesses don’t know it.”

Kuhlman also told NFIB that, because small employers do not have HR departments or benefits specialists, reimbursing employees for the cost of their medical plans and services is both simpler and easier for many small businesses because it helps them to avoid the “administrative headache of setting up a costly group plan.”

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Small businesses can be fined up to $36,500 a year per employee by the Internal Revenue Service under a new regulation that went into effect on July 1 if they assist their workers with their health costs.
small, businesses, irs, fines, helping, employees, health
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2015-34-07
Tuesday, 07 July 2015 03:34 PM
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