If you’ve been paying your Premera Individual plan premium from a business account, it is likely that Premera rejected the payment for January.
Depending on your business set up sole proprietors and business owners may be able to deduct individual plan premiums as a business expense. To determine if you are in that situation you’ll need to have a conversation with your CPA. However, Premera will no longer accept payments from a business account for that premium. If your premium was rejected that puts your plan in jeopardy and you’ll need to pay that premium from another account or method ASAP.
What Premera is trying to end is the practice of a business paying for employees to have individual plans. Often individual plans are less expensive, are specific to the employees’ needs and provider network and have no administration for the employer. While an employer can pay an employee a higher wage or salary to cover the expense, he or she cannot directly pay the premium as a non taxable benefit. If the employer does so it opens the business up to very large fines, courtesy the Affordable Care Act and the IRS. Paying a higher wage carries with it higher payroll taxes and income taxes for the employer and employee respectively.
What are the options? For some groups moving to a small group plan is an option. This keeps the tax benefits. There is no set time of year to start an employer group health plan. Highlands Insurance Solutions would be happy to help you figure out if an employer group health plan is the right option for you.
For other groups, another option are HRPs. Healthcare Reimbursements Plans. Highlands Insurance Solutions, though Zane Health Benefits, has an option that fulfills both the IRS and ACA requirements, preserves the tax benefits and keeps the employer required administration to a minimum. Give us a call if you need a flexible option like this.
In the meantime, here is what Premera has to say about paying for their individual health plans.