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The Wagner Law Group

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.





Contact Info

The Wagner Law Group


  Integrity | Excellence



Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Palm Beach Gardens 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418



Tel: (813) 603-2959

Fax: (813) 603-2961

101 East Kennedy Boulevard

Suite 2140
Tampa, FL  33602 


San Francisco

Tel: (415) 625-0002

Fax: (415) 358-8300

300 Montgomery Street

Suite 600

San Francisco, CA 94104


St. Louis

Tel: (314) 236-0065

Fax: (314) 236-5743
100 South 4th Street, Suite 550
St. Louis, MO  63102 







April 7, 2016


 Health and Welfare Law Alert




IRS Guidance on Employer Reimbursement of Individual Health Insurance Premiums 





The IRS has released additional guidance on employers' ability to reimburse premiums for employees' individual health insurance policies on a tax-free basis. In Information Letter 2016-0019, the IRS confirms that it considers such employer payment plans to be group health plans that are subject to the Affordable Care Act ("ACA") market reform rules.


Background. While the ACA does not directly modify the tax treatment of employers' reimbursements of employee medical expenses, it does implement certain market reform rules for group health plans. These market reform rules include a prohibition on annual or lifetime dollar limits on "essential health benefits" and a requirement that certain preventive services be provided without cost-sharing. The ACA's market reform rules apply to employer-provided health coverage regardless of the size of the employer and regardless of whether the employer is subject to the ACA's employer mandate provisions.


IRS Guidance. The IRS confirms in the Letter that it views an employer's agreement to reimburse health care insurance premiums up to a fixed amount as a group health plan with an annual limit on essential health benefits, thereby violating the ACA's market reform rules.


IRS rules provide that where an employer offers group health coverage that satisfies the ACA's market reforms along with a separate arrangement to pay for other medical expenses, the pair can be combined to satisfy the ACA market reform rules. (See the Alert of 10/17/13 for further information.) However, the Letter clarifies that where an employer does not offer an employee group health coverage and its employees obtain "other" group health coverage (such as through an individual health insurance policy), a separate, arrangement cannot be integrated with the other group coverage to satisfy the ACA market reform rules. As a result, the separate arrangement would violate the ACA's market reform rules and thereby expose the employer to excise tax liability.


The Letter also clarifies that an agreement to reimburse individual health insurance premiums on an after tax basis would not violate the ACA as long as the reimbursement can be used by the employee for any purpose. This would, for example, prevent the employer from making premium payments directly to the insurer or Insurance Marketplace.


Penalty Amount. The excise tax imposed on employers for violating the ACA's market reform rules can cost up to $100/day per applicable employee. (See 26 U.S.C. §4980D.) This excise tax is generally not deductible for employers, which makes this penalty even more significant.


The Letter is accessible at: https://www.irs.gov/pub/irs-wd/16-0019.pdf





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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.