Notice 2015-17: Q&As on health coverage reimbursement arrangements

Q&As on health coverage reimbursement arrangements

The IRS today released an advance copy of Notice 2015-17 as guidance on application of the excise tax under section 4980 to certain types of health coverage reimbursement arrangements.

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This IRS notice reiterates prior IRS positions that certain employer payment plans that reimburse an employee for some or all of the health insurance premium expenses do not comply with the market reforms that apply to group health plans under the Affordable Care Act.

Notice 2015-17 [PDF 58 KB] provides a list of questions and answers (Q&As) concerning:

  • Transition relief from the assessment of excise tax under section 4980D for small employers—i.e., employers that are not applicable large employers—that reimburse or pay a premium for an individual health insurance policy for an employee
  • The treatment of S corporation health care arrangements for 2% shareholder employees of the S corporation (i.e., federal tax treatment of arrangements reimbursing premiums of 2% shareholder employees of S corporations)
  • Application of the market reforms to certain employer arrangements to fund Medicare premium payments or to provide a TRICARE-related health reimbursement arrangement (HRA)
  • Increases in employee compensation to asset with payments of individual market coverage
  • Treatment of an employer payment plan as taxable compensation

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