A recent health reforms resulting from the provisions of the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148 prevent most freestanding health reimbursement arrangements. We know this is a lot of jargon, so we have tried to simplify the wordy provisions below and remove most of the legal language.
What is a free standing health reimbursement plan and do you have one?
A freestanding plan can be called a few names (cafeteria plans, employer payment plans, premium only plans…), but if your organization is reimbursing you for your health insurance, odds are you are under one of these plans that are no longer acceptable under the affordable care act.
What are the consequences of not changing a plan that is non-compliant?
Non-compliant health arrangements are subject to a $100-per-day excise tax per employee under Sec. 4980D. I am sure you are thinking “that’s steep!!!”. It is very steep.
What can you do about this?
If you only have one employee on the plan
If there is only one person on the plan, section 9831 carves out an exception. If an arrangement only benefits a single employee the market reforms will not apply. Notice 2015-17 states that this plan can cover multiple individuals (such as your family). Note: those allowed on the plan are limited to your spouse and dependents.
If you have more than one employee on the plan
You should immediately take action to change your health plan at your organization. Acceptable plans can vary dramatically, but essentially a plan that is not reimbursable would not be subject to these limitations discussed above.
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Corey has 10 years of professional experience in financial planning and analysis. His previous areas of focus involved helping launch the Financial Services department of a large government contractor, where he developed the various reporting and budgeting systems.
Corey also actively manages Shorebird, a Registered Investment Advising firm that focuses on Financial Advising, Planning, and Investment Management for clients. He is also an adjunct finance professor at the University of California, Riverside for their graduate-level programs.
Corey received a B.A. in Business Administration at the California State University, San Bernardino; a Masters in Business Administration and a Masters in Finance from Indiana University’s Kelley School of Business.
Jonathan has more than 7 years of professional experience in corporate taxation and strategy with both public and private companies. His industry experience includes entertainment, church finances, medical device, and technology. Jonathan is also an adjunct professor at the University of California, Riverside (named a Best Business School by Princeton Review and named a Best Undergraduate Business School by Businessweek) and speaks at conferences on topics such as leadership and management.
Jonathan is a graduate of the University of California, Riverside and an MBA candidate at UCLA Anderson School of Management. He is a licensed Certified Public Accountant (CPA) in California.
Jonathan previously worked at PricewaterhouseCoopers, LLP where he specialized in corporate taxation.
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