Many employers—particularly smaller employers who do not offer a company-sponsored group health plan or those with employees who opt to secure coverage separately—consider reimbursing employees for all or part of the premiums of such coverage. While perhaps generous in intent, reimbursing an employee's individual health coverage policy premiums may expose employers to substantial fines, whether the employee obtained coverage under an Affordable Care Act Exchange or a policy of individual coverage obtained through an insurer. Such reimbursement arrangements are considered to be "employer payment plans" that constitute a group health plan coverage under the Affordable Care Act—which do not meet the requirements of the Act. Formerly, certain small employers were temporarily permitted to reimburse such employees for individual policy premiums, but, per new guidance issued earlier this year, that window closed in July 2015. Now employers who reimburse employees for the cost of individual health care coverage are subject to substantial fines. However, employers are allowed to pay employees additional compensation, so long as the additional payment is not conditioned on the purchase of individual coverage.
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