Change in Tax Treatment of Health Insurance Reimbursements

In the past, you may have chosen to reimburse your employees for health insurance premiums instead of establishing a group health insurance plan. Those payments were typically made as part of an employer payment plan and were generally tax-free. Under the Affordable Care Act, that treatment is no longer allowed. Instead, payments you make to employees so they can purchase their own health insurance are now considered taxable wages. Continuing with the former method could lead to penalties of as much as $100 per day per employee.