IRS gives employers an ObamaCare warning

The Obama administration has issued a ruling that aims to stop employers from casting their workers into the federal healthcare exchanges.

The Internal Revenue Service (IRS) this month said employers are not permitted under the rules of ObamaCare to provide tax-free money to employees to help them cover the cost of healthcare premiums on the federal exchanges.

Some businesses had been considering whether a lump sum payment would be cheaper than keeping workers on their in-house insurance plans. 

But the IRS said tax-free payments to employees would not meet the coverage requirements of the healthcare law, meaning any business that provided them would face penalties of up to $100 per day from the government.

Many healthcare experts predict employers will steadily move their workers to federal insurance plans in the years ahead. One recent study found businesses could save more than $800 billion over the next decade by shedding responsibility for healthcare coverage.

The IRS rule was first reported by The New York Times, which analyzed a question-and-answer document released by the administration earlier this month clarifying the rule.

—This article was updated May 27 at 1:46 pm.