By definition, paying your employees' health insurance premiums directly is considered to be an Employer Payment Plan (EPP). An EPP is not compliant with the IRS code as it doesn't include the basic preventative care required by the Affordable Care Act (ACA). In addition, the IRS states that employers with less than 50 full-time employees are not in compliance with the ACA if they're using an EPP to reimburse employees for health insurance premiums.
2. Requiring employees to provide proof of a purchased health plan.
Instead of offering group health coverage, some employers choose to give their employees a stipend to purchase their own insurance. While there are certainly pros and cons to this decision, the biggest drawback is that there can be some hefty tax penalties for both the company and the employee is the stipend is mishandled. Requiring employees to provide proof of a purchased health plan is one of the most common mistakes that employers make. The IRS views companies asking employees for proof of insurance as an EPP, which is not compliant with the ACA.
3. Using an outdated Health Reimbursement Arrangement (HRA).
The rules for HSAs are constantly changing, making it challenging for employers to keep up with what is compliant. For example, the stand-alone HRAs that many small businesses became accustomed to were abolished in 2013 under the ACA. However, the new Small Business HRA became available on January 1, 2017, and it offers many of the same benefits of the former stand-alone HRAs for small businesses. Employers must use the right HSA in order to avoid penalties from the IRS.
As you read through this list, are you finding that your company is making any of these common mistakes when it comes to insurance? If so, we can help. Our team at Summerlin-Roberts is well-versed in health reform, which allows us to be able to put together a custom health benefits solution that will best meet the needs of your employees and your company. Please contact us at Summerlin-Roberts to get the process started.