They say you can’t fight the tax man but members of Congress on both sides of the aisle are doing just that. What it took to unite Republicans and Democrats is a new rule from the Internal Revenue Service that effectively would end the way many small businesses help their workers afford health care.
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These vehicles, known as Healthcare Reimbursement Accounts, are funded with pre-tax dollars by employers who can’t afford pricey human resources departments and health care coverage plans. Just days ago, the IRS announced they would impose fines of $100 a day per employee on companies that offer these programs, even the ones below the 50-employee minimum who are not required to have healthcare.
The Treasury Department disallowed employers from using stand-alone HRAs to reimburse employees for healthcare-related expenses last September, stating these arrangements did not satisfy the Affordable Care Act’s minimum benefit and annual dollar cap requirements for health insurance plans offered by employers. As a result, employers that continue to offer HRAs would be subject to a $100 per day, per employee penalty, totaling up to $36,500 over the course of the year. The Treasury delayed enforcement of the rule until July 1.
Legislators, though, say small business operators in their districts are complaining about the change. “I’ve heard from farmers, small business owners and accountants who are worried about getting hit with a penalty for something they’ve done for a long time without any controversy.” said Grassley. “ It doesn’t make sense to tell small employers they can’t help their employees get health insurance. Why disrupt something that worked? Our bill puts this provision back to what it was so farmers and small businesses can use this option as they see fit.”