There continues to be an incredible amount of deception about standalone health reimbursement arrangements, and some misunderstanding of what, if anything, is now permitted in terms of premium reimbursement. A couple of posts I wrote last year helped provide some clarity on these issues and I’ve been asked by a number of folks to update the post for 2016.
A history lesson: Back in 1961, the Internal Revenue Service issued Revenue Ruling 61-146, which recognized “employee payment plans” as ways that employers could pay for certain expenses for their employees. Prior to that ruling, any reimbursement by an employer for its employees’ medical expenses was considered taxable income to that employee. Many of these rules were clarifications about two sections of the Internal Revenue Code: Section 105 which permitted the creation of medical expense reimbursement arrangements (MERP) and Section 106 concerning payments by employers for group health plans.
