On February 18, 2015, the IRS issued Notice 2015-17 provides transition relief from the assessment of excise tax under section 4980D for small employers (in particular, employers who are not applicable large employers) who reimburse or pay a premium for an individual health insurance policy for an employee. Under the Affordable Care Act, there is a $100 per day penalty on employers who directly reimburse employee health insurance premiums. This relief applies for all of 2014 and through June 30, 2015 to small employers defined as those with fewer than 50 full-time equivalent employees. Employers given relief by the Notice will not have to file Form 8928 and report the excise tax under section 4980D or request a waiver.
Notice 2015-17 also addresses the treatment for federal tax and for market reform purposes of arrangements reimbursing premiums of 2%-shareholder employees of S corporations. Although it is unclear whether the reimbursement of the 2%-shareholder employees of S corporations will be subject to market reforms, no excise tax will be asserted for any failure to satisfy these rules until further guidance is provided.
Finally, Notice 2015-17 addresses application of the market reforms to certain employer arrangements to fund Medicare premium payments or to provide a TRICARE-related health reimbursement arrangement (HRA).