Earlier this year the IRS clarified that employers who provide employer payment plan arrangements do not comply with the Affordable Care Act’s market reforms, leaving them open to an excise tax. Employer payment plans occur when the employer reimburses employees on a pre-tax basis for individual health insurance premiums. Some employers have decided to do this to help offset the cost of individual health insurance. However, under IRS Notice 2013-54, these payment arrangements are considered employer payment plans, a type of health plan subject to the ACA’s reforms. Because they do not comply with the ACA’s regulations, the IRS declared that these payment arrangements may leave the employer subject to an excise tax of $100 per day for each applicable employee, or $36,500 per employee per year (under IRS Code Section 4980D). There is one salvation for employers who want to avoid this excise tax, yet continue to offset the individual insurance cost for employees: Premium reimbursement arrangements made on an after-tax basis will still be permitted.