Posted by Jorge Guerrero, CPA
On December 13, 2016, President Obama signed into law the “21 Century Cures Act”. This new law is great news for small employers who do not offer “group health insurance” to any of its employees. The Affordable Care Act (ACA) defines small employers as having averaged less than 50 employees during the year. Prior to the new law, small employers who reimbursed such expenses were subject to excise taxes for failure to comply with the ACA. The new law which takes effect January 1, 2017, permits these employers to reimburse their employees for eligible medical expenses including health insurance premiums up to $4,950. If the employer provides payments or reimbursements to the employee’s family, up to $10,000 is permitted. To qualify for reimbursement of medical expenses, the employee must provide the employer proof of payment. The law also allows for the limits to be prorated when employees are covered by a qualified agreement for only part of the year.
For more information about how this new law may affect your small business, please contact one of our tax professionals.