IRS delays penalties for certain health reimbursement arrangements

The Internal Revenue Service will delay imposing excise taxes on small businesses that reimburse employees for purchasing individual health insurance policies, according to the Washington Bureau of The Business Journals.

Employers reimbursing employees for buying individual plans is an arrangement that does not comply with the market reforms in the Patient Protection and Affordable Care Act. Therefore, employers that offer health reimbursement arrangements could face excise taxes of $100 a day per employee, according to the report.

However, businesses with less than 50 employees with HRAs will avoid the excise taxes until July 1.

In a recent notice issued by the IRS, the agency said the delay was put into place to allow small businesses more time to transition and obtain group health coverage.

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