Excise Tax for Non-Compliance
The ACA can impose an excise tax per affected employee on employers that fail to comply with the Act. The tax can be levied for not complying with rules one of which is employers are not permitted to provide cash (pre-tax or post-tax) to help employees purchase health insurance in the individual market. If an employer does this, they will trigger a $100 per day, per affected individual excise tax. The DOL says because these arrangements cannot be integrated with a health policy, they violate some of the ACA’s rule such as the prohibition on dollar limits for coverage. These arrangements constitute plans for the purpose of providing medical care and because an employer won’t offer an unlimited amount of cash to aid in an individual’s purchase of coverage, the “plan” has a dollar limit and is therefore is not compliant. The IRS issued Notice 2015-17 on February 18, 2015 that offers transition relief from the tax for small employers (those with less than 50 full-time equivalent employees) that have established employer payment plans through June 30, 2015. If one of these plans is in place after this date, the tax will apply.