Employers with 50 or more employees must either provide health insurance that meets certain standards or face tax penalties. This has raised questions of whether you may help employees purchase insurance through an exchange to satisfy that obligation. According to an Internal Revenue Service (IRS) guidance released in May 2014, the answer is no.
You may increase your employees’ wages or salaries with the intent that the additional income be used to purchase insurance through an exchange. However, this would be taxable income to the employee; it does not qualify as a pre-tax payment for a health insurance premium. Additionally, this will not satisfy the requirement to provide qualifying health insurance, and you could still be subject to penalties.
