Affordable Care Act Changes for Household Employers

When the Affordable Care Act (ACA) went into effect several years ago, it provided transitional relief for small employers.  As of July 1, 2015, it no longer offers that relief and the following Affordable Care Act changes for household employers are now true:

• Employers with only one* employee may pay an employee’s insurance premium in whole or in part for that employee, directly to the insurance company and exclude that as income to the employee. If they provide money to the employee to pay the premium, they must get a receipt from the employee to have it qualify as non-taxable.

  *For more information, review Code § 9831(a)(2) here:  https://www.irs.gov/irb/2015-14_IRB/ar07.html

• An employer cannot discriminate and must offer the same benefit to all employees who have the same job status.
• Employees are only allowed to pre-tax an individual insurance premium if it is not already tax advantaged.  It’s recommended that they not pre-tax any insurance premiums paid through the Federal or State exchange.

Employers with two or more employees can no longer set up or fund a Health Reimbursement Account (HRA) to pay for their employees’ individual plans.  Those with only one employee can continue to set up an HRA to help fund their employee’s individual plans.

Contact GTM’s customer service team with any questions at (888) 432-7972.