Update on Purchasing Individual Insurance Via Employer Funded Tax Deductible Accounts

This week we received some long awaited clarification about whether or not an employer can provide funds to an employee through a tax deductible account such as an HRA or Section 125 plan to purchase individual insurance on or off the exchanges.

The final say on this is that because the underlying HRA and Section 125 plans do not comply with the requirement to have no “limits” on preventive health care required under the law, these plans will be out of compliance and subject the employer to the painful $100 per employee per day penalty written as part of the law.

HRA plans can still be used in conjunction with group health plans and maintain their tax favored status.

Leave a Reply

Your email address will not be published. Required fields are marked *