Small Business Owners Relieved that IRS Fines Eliminated with President’s Signature

Date: December 13, 2016

National Federation of Independent Business applauds today’s approval of legislation eliminating fines for health care reimbursement

For Immediate Release
Andrew Wimer, 202-314-2073 or 703-298-5938 (cell)
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Washington, D.C. (December 13, 2016) – The National Federation of Independent Business (NFIB) applauds the President’s signature on legislation that will prevent the IRS from issuing fines on small businesses that reimburse or directly pay their employees for health care costs.

“The excessive fines that would have been issued by the IRS could have bankrupted many small businesses,” said NFIB President and CEO Juanita Duggan. “Reimbursing employees for the cost of health insurance is a very common practice among small businesses. According to our research, many small businesses remain unaware that they are committing a violation. The President’s signature today removes the threat against small employers who think they are doing the right thing for helping their employees.”

In July of 2015, the IRS began enforcing a new penalty on employers who reimburse or directly pay their workers for the cost of premiums or health care services. Neither the penalty nor the prohibition 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, small business owners would be allowed to compensate employees for the cost of individual insurance premiums or medical visits. President Obama has today scheduled a signing ceremony for the bill.

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