Thought Leadership

Limited Relief for Small Employers from ACA Restrictions

December 14, 2016 Advisory

The 21st Century Cures Act, just signed into effect by President Obama, provides limited relief to employers who wish to pay premiums for individual health insurance policies obtained by their employees or for other qualifying medical expenses their employees may incur. The Internal Revenue Service (IRS) has taken the position that the Affordable Care Act (ACA) bars these types of arrangements.

The relief applies only to employers who have fewer than 50 employees and do not offer a group health plan to any employees.

Further, the arrangement must meet certain conditions:

  • It must generally be offered on the same terms to all “eligible employees” (generally as defined under the non-discrimination rules applicable to self-funded group health plans).
  • It must be funded only by the employer (without involving any salary reduction contributions).
  • The employee must provide “proof of coverage.”
  • It provides payment or reimbursement only for eligible medical expenses (including health insurance premiums).
  • Payments cannot exceed $4,950 per year or $10,000 for a family (both adjusted for inflation).
  • The employer must provide employees with a specified notice on a timely basis.

In addition, the relief previously granted to small employers under IRS Notice 2015-17 has been retroactively extended to plan years beginning on or before Dec. 31, 2016.

If your company is a small employer under the ACA (50 full-time employees or less), it may pay, subject to the dollar limitations and other requirements summarized above, part or all of employees' individual health insurance policy premiums and/or other qualified out-of-pocket medical costs related to their health insurance without being subject to excise taxes.

Contact Us
  • Worldwide
  • Boston, MA
  • Denver, CO
  • Edwardsville, IL
  • Jefferson City, MO
  • Kansas City, MO
  • Las Vegas, NV
  • New York, NY
  • Philadelphia, PA
  • Princeton, NJ
  • Salt Lake City, UT
  • St. Louis, MO
Worldwide
abstract image of world map
Boston, MA
225 Franklin Street
26th Floor
Boston, MA 02110
Google Maps
Denver, CO
4643 S. Ulster St.
Suite 800
Denver, CO 80237
Google Maps
Denver, Colorado
Edwardsville, IL
115 N. Second St.
Edwardsville, IL 62025
Google Maps
Jefferson City, MO
3405 W. Truman Boulevard
Suite 210
Jefferson City, MO 65109
Google Maps
Jefferson City, Missouri
Kansas City, MO
2345 Grand Blvd.
Suite 1500
Kansas City, MO 64108
Google Maps
Kansas City, Missouri
Las Vegas, NV
3770 Howard Hughes Parkway
Suite 200
Las Vegas, NV 89169
Google Maps
Las Vegas, Nevada
New York, NY
919 Third Ave., 37th Floor
New York, NY 10022
Google Maps
New York City
Philadelphia, PA
2005 Market Street
29th Floor, One Commerce Square
Philadelphia, PA 19103
Google Maps
Philadelphia, Pennsylvania
Princeton, NJ
100 Overlook Center
Second Floor
Princeton, NJ 08540
Google Maps
Princeton, New Jersey
Salt Lake City, UT
257 East 200 South
Suite 350
Salt Lake City, UT 84111
Google Maps
Salt Lake City, Utah
St. Louis, MO
7700 Forsyth Blvd.
Suite 1800
St. Louis, MO 63105
Google Maps
St. Louis, Missouri