Can Employers Reimburse Employees for Medical Coverage Purchased on the Market Place?

The Affordable Care Act (ACA) has changed the face of Health Care in America. Now individuals are able to shop for their own Health Care plan online and in turn some employers want to reimburse their employees for Market Place health plans. But the question is, is your company allowed to assist it’s employee’s payments on the Market Place?

The IRS answered this questions in three released letters that advised on proper reimbursement that are allowed. The guidelines revolve around the question, “Does your company offer group medical coverage to its employees?” 

  • If the answer is yes, the coverage amount may be paid directly to the exchange or reimbursed to the employee. However the payment must not be included in the employee’s wages because it is considered an arrangement with your company’s group health plan.
  • If the answer is no, the company does not offer a group health plan, then a reimbursement is allowable to help the employee but it must be included it taxable wages.

If you are using a Market Place health plan and being paid back by your employer, make sure they are using the correct methods to ensure all payments are being made correctly! For updates on ACA and other HR topics, check Optimum’s blog often!

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