Agencies Issue Affordable Care Act Guidance Making It Unlawful For Employers to Pay for an Employees Individual Health Insurance Policy on a Tax-Free Basis

On September 13, 2013, the Internal Revenue Service and Department of Labor issued guidance (“Notice”) on how the Affordable Care Act (“ACA”) applies to arrangements under which an employer reimburses an employee for all or a portion of the premium cost of an individual health insurance policy. Some employers have considered dropping their employee health coverage and instead subsidize employee purchases of individual insurance policies on the ACA exchange marketplace that will take affect this October.

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