Affordable Care Act Changes May Affect Household Employers

affordable care act changes may affect household employersWhen the Affordable Care Act (ACA) went into effect several years ago, it provided transitional relief for small employers.  As of July 1, 2015, it no longer offers that relief and the following Affordable Care Act changes for household employers are now true:

  • An employer cannot pay for an individual health insurance plan directly to an employee’s insurance company or reimburse an employee for it.  Instead, they can increase their employee’s salary and allow them to set up a pre-tax deduction with a Premium Only Plan (POP).  Our affiliate company, GTM Payroll services, does offer POP plans and can set up for your employee – get a free quote here.
  • An employer cannot discriminate and must offer the same benefit to all employees who have the same job status.
  • Employees are only allowed to pre-tax an individual insurance premium if it is not already tax advantaged.  It’s recommended that they not pre-tax any insurance premiums paid through the Federal or State exchange.

Employers with two or more employees can no longer set up or fund a Health Reimbursement Account (HRA) to pay for their employees’ individual plans.  Those with only one employee can continue to set up an HRA to help fund their employee’s individual plans.

See more information from the IRS and read about the ACA and household employment here.

Contact us with any questions at (518) 348-0400.