Additional details on removal of penalties for health plans for Small Businesses

As we reported last month, employers with less than 50 employees can once again reimburse employees for individual health plans and other medical expenses without facing penalties. Now we’re starting to learn more specifics.

Employers must provide written notice of the plan to all employees. This year that notice must be given before March 12, 2017, due to the late timing of the law. In future years, the notice must be provided at least 90 days before the start of the year.

The notice must include the amount of the employee’s permitted benefit for the year. (Maximum of $4950 for Individual, and $10,000 for Family plan) A warning that employees must be covered for all months or will be subject to penalties & tax under Section 5000A. The employee must provide the program information to any Health Insurance Marketplace where they apply for an Advanced Credit.

The payments for reimbursements of medical expenses are deductible for the employer and not included as income for the employee.