IRS Regs on Employer Insurance put more burden on individuals

IRS Regs on Employer Insurance

The IRS is out with a new regulation targeting employers who sought cost savings by dropping health insurance in favor of giving employees tax-free contributions to pay for premiums. The ruling says that "an employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange." Why? The New York Times reports, "Such arrangements do not satisfy the health care law, the administration said, and employers may be subject to a tax penalty of $100 a day -- or $36,500 a year -- for each employee who goes into the individual marketplace." The only alternative for an employer now is to pay higher taxable wages instead of health benefits. Barack Obama wants the employer-based health insurance system to continue functioning, but he wants to make it a frying pan or fire proposition.