Under the affordable care Act, employers using employer payment plan face penalties of up to $ 100 per day per employee.
Many business owners and insurance advisors are, however, unaware of is a repayment plan that meets the requirements the affordable care Act and still allows reimbursement of individual health insurance. It is called a health care reimbursement scheme (HRP) and is different from an employer payment plan.
What is a plane employer payment
In Opinion ? 2013-54 , the IRS defines an employer as a payment plan arrangement where:
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the employer directly reimburses an employee for insurance policies individual health, or
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an employer directly pays employee premiums.
reimbursements are payment plans (ie excludable income) under section 106 of the Internal Revenue Code of franchise 'tax.
Why not an employer's payment plan consistent? To summarize, the employer payment plans do not cover basic preventive care services as required by the ACA market reforms. Therefore, employers using payment plans are now subject to the $ 100 per day the excise tax
Related :. New penalties start today to pay employees the Wrong Way
What is a system of reimbursement of health care?
a healthcare reimbursement plan (HRP) is a type of article 105 of medical expenses reimbursement plan designed for individual repayment of health insurance. HRP is designed to comply with the ACA market reforms.
Why is a consistent HRP? Under current regulations, the tax-free reimbursement of individual health insurance is always enabled by a Section 105 Plan - nothing in the current tax code has changed. However, the HRP should be structured to meet the requirements of market reforms.
To comply with market reforms, the HRP is structured to not reimburse employees for:
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individual health insurance premiums, and
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Basic preventive care services as required by the PHS Act 2713.
How is a different employer's payment plan of HRP?
On the surface, an employer payment plan and HRP appear similar; they are the two ways to help employees with the cost of individual health insurance
There are, however, three important differences :.
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With HRP, the employer makes contributions to the plan - not directly to individual policies and not directly to employees. With HRP, employees use the repayment plan for eligible health expenses. With a payment plan the employer, the employer is generally made of direct payments or reimbursements.
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A HRP is consistent with market reforms. HRP does not place an annual limit on essential health benefits and covers preventive care services without cost sharing. A payment of employer plan does not cover preventive care services.
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A HRP is a formal health plan with documents of legal regimes. As a group health plan, HRP meets the requirements of market reforms, as well as other applicable federal requirements. A payment of employer plan is also considered a group health plan, but do not meet the requirements of market reforms.
For a visual, see this chart on how to pay employees properly .
Conclusion
As employers continue to adopt individual reimbursement of health insurance, it is important to understand an employer payment plan is other than HRP. The bottom line? On July 1, 2015, employers using payment plans are subject to fees. Employers using a compatible HRP (as ZaneHealth) are not subject to fees.
in the transition to HRP to avoid costly fees, contact provider reimbursement Software to help you set the plan and OTS to.
More resources on understanding the employer payment plans and HRPS
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What that an employer payment plan?
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Bill Payment - What every small business should know
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health insurance rebate - How to avoid costly penalties
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repayment plan for health care (HRP) - what
what questions do you have about the difference between the employer's payment plan and section 105 of health care reimbursement scheme (HRP )? Leave a question below.
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