Monthly Archives: July 2014

Employer Health Insurance Tactic May Backfire

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The IRS has warned of costly consequences to an employer that doesn’t establish a health insurance plan for its employees, but reimburses them for premiums they pay for health insurance. It’s an attractive option on the surface – avoiding establishing a costly group health plan while providing your employees the means to buy their own insurance.  But it has hit a major snag.

According to the IRS, these arrangements are considered to be group health plans subject to the market reforms of the Affordable Care Act. These reforms include the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing. Simply giving your employees the money to buy their own individual policies doesn’t mean you’ve cleared this hurdle.

Consequently, such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee. That money adds up quickly.  The best thing to do is to reach out to a well qualified insurance professional to determine what, if any, coverage you are required to provide and whether what you’re currently doing will meet those obligations.

About the author

Brady is the owner of Ramsay & Associates. He specializes in financial statement preparation and personal, fiduciary and corporate tax and accounting.

His professional experience includes seven years' experience for local and national CPA firms before joining Ramsay & Associates in 2006.

He has a Bachelor of Accounting degree from the University of Minnesota Duluth. He is a Certified Public Accountant, a member of the Minnesota Society of CPA's, an Eagle Scout, as well as an active volunteer in the community.

Independence Day – From Taxes?

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If you look at the founding of America, lots of things were at play, but one of the main sticking points was “taxation without representation”. King George III of England had been imposing taxes on all manner of things in “The Colonies” without allowing the colonists to be represented before his government. Anyone recall the Boston Tea Party from high school social studies?  It was a tax thing. Since our founding, taxes and freedom have been closely linked.

Each year, The Tax Foundation, an independent tax policy research firm, calculates what it calls “Tax Freedom Day”.  By Tax Freedom Day, the whole of America has earned enough to pay its tax bill for the year, including federal, state, property and sales taxes. Basically, all the money earned prior to Tax Freedom Day pays taxes, and what comes after is what we get to keep.

In 2014, that date was April 21 on average.  Each state has its own based on its tax rates; Minnesotans worked until April 29th to cover their taxes, while our neighbors in South Dakota cleared their tax burden on just April 4th.

This way of looking at the information puts both taxes and government spending into sharp focus.  You can find the article here to see how your state ranks.

From all of us, have a safe and enjoyable Independence Day!

 

About the author

Brady is the owner of Ramsay & Associates. He specializes in financial statement preparation and personal, fiduciary and corporate tax and accounting.

His professional experience includes seven years' experience for local and national CPA firms before joining Ramsay & Associates in 2006.

He has a Bachelor of Accounting degree from the University of Minnesota Duluth. He is a Certified Public Accountant, a member of the Minnesota Society of CPA's, an Eagle Scout, as well as an active volunteer in the community.