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7 signs of trouble for small business health plans

The Affordable Care Act changed the tax treatment of small business health plans by adding reporting requirements and excise taxes for some of the most common types of employee health care coverage arrangements. This post is a “short list” compiled from a more detailed checklist that I published last year. Tax advisors may wish to be on the lookout for these common small business health plan issues that can trigger additional taxes and penalties:

  1. a written “Notice of Health Benefits” was not provided to employees
  2. an employer has no written health plan documents
  3. the employer presumes that their insurance company handles ACA compliance requirements without evidence
  4. employer is reimbursing employee health expenses outside of a qualified employer plan
  5. paying for or reimbursing the cost of insurance offered through Healthcare.gov, Tricare or other individual plan
  6. Stand-alone HRAs or employer payment plans marketed under various names and acronyms like “POP” or “HRP”
  7. Section 125 cafeteria plans that include health benefits

If an employer has any of these triggering conditions, it makes sense to explore the tax consequences and strategies to mitigate the cost now before year end 2015.

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