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The Affordable Care Act and Payroll

Author : Dennis Najjar
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Avoid substantial penalties this year! We advised our clients several times throughout the year, with reminders and information, to stay ahead of this looming problem. However, in an effort to help spread education, we are including it here for the benefit of non-clients as well!

The Affordable Care Act (known as Obamacare) took effect on 1/1/15. One of the provisions of ACA prohibits employers from reimbursing an employee for health insurance premiums the employee paid out of pocket. This includes any payments through payroll on a pre or after-tax basis. This portion of the ACA does apply to employers with less than 50 FTEs. As part of the legislation, there is a $100/day per employee penalty for non-compliance with the ACA beginning on 7/1/15.

If you are reimbursing your employees for health insurance, we recommend speaking with your tax preparer to insure you are in compliance with the ACA to avoid substantial penalties. Any corrective action should be processed before the last payroll of the year.

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