Employers that offer HRAs and FSAs outside of a cafeteria plan may unknowingly have a
Quarterly Federal Excise Tax Return, filing requirement due to ACA provisions. Sections 4375 through 4377 impose and define an excise tax for offering health insurance based on the number of individuals covered by the policy. Although this will primarily affect the issuer of the policy, employers that are fully self-insured or offer an HRA or health FSA will be affected. Because of the broad definition of “applicable self-insured health plan” in §4376, unless the HRA or FSA provides “excepted benefits” as defined in §9832 and meets other requirements, the employer must pay an excise tax of $1 per covered person (this increases to $2 in 2014). This must be reported on Form 720 and paid by July 31, 2013. There is no de-minimus amount to be excepted.
See §4375 through §4377, our a research service and Form 720 for more information and be sure to discuss this issue with your clients as soon as possible.
TAXPRO Weekly - June 13, 2013