from the National Association of Tax Professionals | February 20, 2015
ACA Penalty Relief
The IRS has issued Notice 2015-17 clarifying the application of Notice 2013-54 to certain situations. The notice provides relief for employers who are not applicable large employers (ALES), as defined in §4980H. In summary, the IRS will not assess any penalties for reimbursement arrangements for 2014 through June 30, 2015. After June 30, 2015, the IRS states they may start assessing penalties. Specifically, the IRS addresses:
- The transitional relief through June 30, 2015.
- The treatment to 2% S corporation shareholders.
- Reimbursing for Medicare, TRICARE or Medigap.
- Increasing employee compensation on an after-tax basis in a way that is not tied to health insurance.
- Treating insurance reimbursements as taxable wages.
The IRS confirmed that for the time being, they’ll allow an S corporation shareholder to deduct reimbursed insurance as a self-employed health insurance under §162 (l). The IRS has also clarified that treating insurance reimbursements as after-tax is still in violation of Notice 2013-54; however, the IRS will not assess penalties for 2014. Lastly, the IRS clarified that if an employer offers a group health plan, it may be integrated with a reimbursement for Medicare premiums without violating the Market Reforms.
Read notice here: Notice 2015-17