IRS: Employers Can't 'Dump' Workers on Health Care
Large businesses still have to pay employee health costs
By Neal Colgrass, Newser Staff
Posted May 26, 2014 1:35 PM CDT
This file photo shows the headquarters of the IRS in Washington.   (AP Photo/J. David Ake, File)

(Newser) – The IRS has sent a message to employers—that they can't just hand workers cash and "dump" them into insurance exchanges. Spelled out in a Q&A document, the ruling says employers will be taxed an extra $100 a day for each worker sent into the marketplace to buy their own insurance. The decision seems aimed at larger employers, who, under ObamaCare, must provide full-time workers with health care (average cost: $5,000 a year per employee) or be subject to penalties, the New York Times reports.

Many employers decided to save money by taking the "dumping" route—which the IRS still allows, but will tax sums given to employees on both ends (while employer-provided health care is non-taxable). Reacting negatively, a partner at a large accounting firm said the ruling eliminates health-care-reimbursement arrangements that employers have had with workers "for decades." Employers aren't the only ones seeking a health-cost workaround, the Times notes: Hospitals have begun cutting back assistance to needy patients, hoping to push them into buying low-cost plans under ObamaCare.

View 1 more image
Next on Newser: Baby Has Extra Head Removed
More From Newser
My Take on This Story
To report an error on this story,
notify our editors.
IRS: Employers Can't 'Dump' Workers on Health Care is...
5%
34%
9%
28%
5%
18%
Show results without voting
You Might Like
Comments
Showing 3 of 76 comments
NorCalHal
May 30, 2014 9:47 PM CDT
"The decision seems aimed at larger employers, who, under ObamaCare, must provide full-time workers with health care (average cost: $5,000 a year per employee) or be subject to penalties, the New York Times reports" Sounds like a great job creation strategy; add $ 5,000 per employee to companies costs or hit them with fines and penalties..... Still can't imagine why anyone would want to move their labor intensive production or manufacturing plants to Mexico, Puerto Rico or China????
RAD45
May 28, 2014 2:46 PM CDT
No surprises in this story. It's all about maximum profit and minimum overhead. Notice there was no mention of management, executives and board members being dumped into Obamacare!
Brad Kort
May 28, 2014 2:00 PM CDT
The law of unintended consequences in action. Since the law was so poorly thought out and executed, expect to find lots more collateral damage in the coming years.