JAS 1947
Level 1
‎10-23-2024 07:13 PM

I consult with a business that is exempt under the Affordable Care Act (less than 50 employees). The cost of offering traditional Health Insurance likely is cost prohibitive. The company wishes to pay a stipend to employees which they can use to purchase health insurance in the government marketplace. I have some concerns about this:

1. Can the employer only offer stipends to certain employees (in this case, employees? Would this be considered discriminatory?

2. Can the amount vary by employee?

3. My research indicates that the employee should not be required to provide evidence of their insurance coverage or health care spending receipts. Is this correct?

Thank you.

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sjrcpa
Level 15
‎10-23-2024 08:10 PM

If it's simply money to use for health insurance if you want, but spend it however you want, we won't ask, then it's taxable wages .


The more I know the more I don’t know.
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qbteachmt
Level 15
‎10-24-2024 01:08 PM

There is a specifically Qualified reimbursement arrangement that would be tax free:

https://www.healthcare.gov/small-businesses/learn-more/qsehra/

"To qualify for a QSEHRA, a small employer generally must:

  • Have fewer than 50 full-time employees
  • Provide the arrangement on the same terms to all full-time employees (reimbursement amounts may only vary based on age and the number of individuals covered)
  • Not offer a group health plan, like SHOP coverage or a flexible spending account (FSA)"
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