ACA and the Non-Employer Sponsored Premium Reimbursement Plan

[duanecpa]

The non-employer sponsored premium reimbursement plan is one whereby the employee can pay for the premiums of their individual health insurance pre-tax even though they have opted out of the employer sponsored group health insurance plan. Does this option still exist? For 2015 and forward?

Citations would be helpful.

Thank you.

[TaxGuyBill]

Are you referring to a Health Reimbursement Arrangement (HRA) where an employer reimburses the employee for their individual insurance policy premium?

If so, employers are not allowed to do that anymore. HRAs are only useable if they are combined with 'regular' insurance or the company has ONLY ONE employee (including the any corporate officers). If they are 'stand-alone', the employer is subject to a $100 per day per participant penalty.

http://www.irs.gov/pub/irs-drop/n-13-54.pdf

[duanecpa]

Are you referring to a Health Reimbursement Arrangement (HRA) where an employer reimburses the employee for their individual insurance policy premium?

If so, employers are not allowed to do that anymore. HRAs are only useable if they are combined with 'regular' insurance or the company has ONLY ONE employee (including the any corporate officers). If they are 'stand-alone', the employer is subject to a $100 per day per participant penalty.

http://www.irs.gov/pub/irs-drop/n-13-54.pdf

No - the only employer involvement is providing the vehicle (NESP) in the cafeteria plan for the employee to take a portion of their salary and pay for their individual health insurance premiums pre-tax. This is referred to as NESP - Non-Employer Sponsored Premium Plan. The business has more than 2 employees. The question is - for an employee who has opted out of the employer sponsored group health insurance plan can that employee use an NESP to pay for the premiums of their own individual health insurance plan?

[David1980]

I've seen different opinions on it, and don't have anything authoritative to give but will add that TASC believes this can still be done under ACA. (TASC of course makes money selling/managing these kinds of things.)

http://tasccapitalconnection.com/2014/07/30/tascs-response-to-2013-54-compliance-bulletin-10-2/

They do include a limitation in their interpretation.

It remains clear that an employer may offer an HRA or self-funded group health plan that pays individual premiums ONLY when that employer also offers a plan that complies with PPACA’s annual limits prohibition. As a result, TASC no longer supports stand-alone HRA plans. (Note: This does not affect TASC’s traditional one employee

So, it would seem TASC won't give you their audit guarantee if you're their customer and the employer isn't offering a plan that complies with PPACA as well.

(Note: Per PPACA, Public Marketplace premiums are NOT eligible for reimbursement from a Sec. 125 plan; this practice is strictly prohibited.)

They also indicate this can't be used to reimburse marketplace premiums.