IRS issued Notice 2015-17
On Feb. 18, 2015, the Internal Revenue Service (IRS) issued Notice 2015-17. This notice:
· Reiterates that employer payment plans are group health plans that will fail to comply with the ACA’s market reforms applicable to group health plans;
· Clarifies that increases in employee compensation do not constitute an employer payment plan, as long as the increases are not conditioned on the purchase of individual health coverage;
· Provides transition relief from the excise tax for employer payment plans sponsored by small employers (those not subject to the ACA’s employer shared responsibility rules) and to S corporation healthcare arrangements for 2-percent shareholder-employees;
· Addresses whether employers may reimburse employees for Medicare or TRICARE premiums for active employees under the ACA; and
· States that employer payments for individual premiums can be excludable from an employee’s income under the tax code, but will still violate the ACA’s market reforms.