Small Businesses Potentially Hit with Hefty Health Cost Fees: $36,500 in IRS Fines

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It is not uncommon for small businesses to attempt to alleviate medical costs for their employees by reimbursing the cost of health insurance premiums. Some have even covered medical costs 100% depending on the circumstances. That could all quickly disappear beginning July 1, 2015.

This is when a new Internal Revenue Service regulation could potentially fine small businesses $36,500 a year per employee. Under these new guidelines, businesses are subject to paying $100 per employee per day in fines for employee premium reimbursement or payment. The notice outlines that employers providing employee health premium payments fall under the umbrella of a group health plan. The amount would not be effected by a pre-tax or post-tax contribution.

In comparison to the $2000 mandatory penalty under ObamaCare for failing to provide qualifying health insurance, the penalty is eighteen times greater under the new guidelines. However, unlike the ObamaCare penalty, employers do not receive an exemption for having fewer than fifty employees.

There is a gleam of hope for resolution and legislation. Rep. Charles Boustany has made an introduction into the House, and Sen. Charles Grassley has done so in the Senate in efforts to remedy the situation. The bills currently await congressional input.

Check out more IRS News stories by clicking that link.

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