After complaints and controversy, the IRS just gave some relief to small business owners facing steep fines under the President’s health care law for doing something helpful for their employees.
Several Iowa small business owners contacted me in fear of this penalty. Like business owners all over the country, they didn’t know about it until it was almost too late. The IRS did a poor job of explaining the new requirement. The law bars small business owners from doing something many of them have done for years – reimbursing or directly paying the premiums of an individual health policy purchased by their workers.
A small business that continues this practice is subject to fines of as much as $100 per day. The practice was banned for 2014, but confusion reigned, and the word didn’t get out.
After hearing concern from small business owners, and complaints from me and maybe other members of Congress, the IRS announced a delay in the enforcement of the penalty until June 30.
Even though the delay is welcome, the end result is the same. Under the President’s health care law, small businesses can’t help their employees with health insurance costs through reimbursement arrangements.
From now on, these employers who want to provide help with employees’ health care have one option that worked well for them taken off the table. Going forward, the available options might be more expensive for the employees, more expensive and burdensome for the businesses, or both.
Businesses should have options to do what makes sense for them and their employees. Those who create and maintain jobs shouldn’t face steep government fines for trying to do something helpful for their workers.
The President’s health care law scrapped an option that worked well for a lot of people. I’m working on a permanent fix to restore that option.