Can my employer give me money toward health insurance in an Obamacare exchange plan?

2013

It’s still to be determined if any significant number of employers will drop health insurance, pay the penalty and force employees into an Obamacare exchange plan. Most experts don’t see this as a wide-spread practice. However, when it does occur the employer may offer employees a contribution toward the exchange premium.

Can an employer contribute toward health insurance in an Obamacare exchange plan? Yes, but!

Any such employer contribution will be considered taxable income to the worker (as opposed to tax free contributions within employer group plans).

On Friday, September 13, 2013, The Treasury Department published Notice 2013-54, which eliminates an employer’s ability to use a stand-alone health reimbursement arrangement (“HRA”) or other tax-favored arrangement, such as a cafeteria plan, to help employees pay for individual health insurance policies on a tax-free basis.

We need to rethink who gets tax free benefits and who doesn’t.