New law's provision may encourage many operators to change insurance coverage

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President Barack Obama signed the 21st Century Cures Act into law earlier this week. Tucked away in the omnibus package is a provision that should help many senior living operators.

Starting in January, operators with fewer than the equivalent of 50 full-time employees can reimburse workers for purchasing individual health insurance as if it were directly paying the premiums on a group health policy.

That means the employee won't have to pay taxes on the company's premium contribution, nor will the company owe payroll taxes on it, according to the legislation, said tax experts familiar with the legislation.

The benefit does have a few caveats, however. For example, the operator cannot offer a separate group health plan. The firm also must make the reimbursement available on the same terms to all employees (but the amount can be varied to account for the employee's age and family size). Individual insurance is capped $4,950, whereas the limit for a family plan is $10,000.

Operators should consult tax experts before adjusting their insurance coverage, several sources advised.

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