Health Care Committee Update
May 27, 2014

Staff Contact: Lev Ginsburg

IRS ruling on some methods of employer health insurance compensation

On May 13, 2014 the IRS issued a "Q&A" on its website that employers cannot give tax-free contributions to their workers to purchase health insurance on the exchange, as it is considered a violation of the Affordable Care Act's mandate that large employers provide health insurance coverage to their full-time workers.  Employers who employ this tactic, "may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee).   

This “Q&A” does not pertain to an employer that raises an employee’s salary in order to buy insurance with the additional money.  The applicable “Q&A” can be found here: