While the news about politics has centered around President-elect Donald Trump’s transition team, little news about tax reform has hit the mainstream media. However, Congress has made some changes that could affect employers and employees alike as early as next year.
If you work for an employer that regularly reimburses you for your medical expenses, chances are that you are oblivious to the penalties these employers may be liable for. While some employers are able to avoid this penalty, others encounter tax bills that may prevent them from continuing to offer such a perk.
Nevertheless, Congress has revisited this issue and has now amended the law so that employers won’t be penalized. According to a recent accountingtoday.com report, Congress has passed the 21st Century Cures Act, which will now allow small businesses to reimburse employees for the cost of individual insurance premiums as well as their medical visits.
As we alluded to earlier, businesses would incur a tax penalty for reimbursing their employees for specific health care costs. Non-compliant entities would have been fined $100 day and up to $36,500 per year for their transgressions. Again, while this would not have directly affected employees, it is reasonable to think that employers who were previously fined for helping their employees would not be inclined to do so if the law was not changed.
As the new law takes effect, taxpayers must be especially vigilant in keeping records for medical payments so that they may take advantage of tax benefits.
The preceding is not legal advice.