NFIB Cheers House for Nixing IRS Penalty for Helping Workers Buy Health Insurance

Date: November 30, 2016

National Federation of Independent Business calls measure eliminating IRS fines a relief for employers and employees

For Immediate Release
Andrew Wimer, 202-314-2073 or 703-298-5938 (cell)
Follow NFIB on Twitter @NFIB

Washington, D.C. (November 30, 2016) – The National Federation of Independent Business (NFIB) today applauded House passage of a measure eliminating a controversial IRS penalty on businesses that reimburse workers for the cost of health insurance.

“Small business owners are relieved that the House advanced legislation to protect them from outrageous IRS fines,” said Amanda Austin, NFIB Vice President for Government Relations. “According to NFIB research, a significant percentage of small business owners reimburse their employees for the cost of health insurance. That’s perfectly consistent with the goal of expanding health insurance coverage and it should never have been punished in the first place.”

In July of 2015, the IRS began enforcing a new penalty on employers who reimburse their workers for the cost of premiums or health care services. Neither the penalty nor the reason for it appears anywhere in Affordable Care Act. Nevertheless, employers who violate the rule face fines of $100 per day, per worker. That amounts to $36,500 a year, which is 18 times larger than the penalty imposed on larger employers that don’t offer insurance to their workers.

Under Section 18001 of the 21st Century Cures Act, adopted today by the House, small business owners would be allowed to compensate employees for the cost of individual insurance premiums or medical visits. The bill Senate is expected to consider the bill next week. President Obama has issued a statement supportive of the legislation.



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