On December 13, 2016 President Obama signed the 21st Century Cures Act. This legislation re-establishes a health reimbursement arrangement for small Employers called the Qualified Small Employer Health Reimbursement Arrangement. With the passing of this act, many small employers and their employees can return to the practice of being reimbursed by their employer for the cost of obtaining private insurance (whether it be on the ‘exchange’ or via the employer provided health insurance of a spouse).
Starting January 1, 2017, small employers that do not offer group health insurance to their employees will have an ability to provide a tax-favored reimbursement to their employees. This new HRA would allow eligible small employers to offer a health reimbursement arrangement funded solely by the employer that would reimburse employees for qualified medical expenses including health insurance premiums.
Who Qualifies for a Small Employer HRA?
- An employer with less than 50 full time employees and does not offer a group health plan to any employees.
- Employers must have the applicable plan documents to legally offer this benefit.
- The Small Employer HRA must be provided on the same terms to all eligible employees, (however, the Act allows benefits under the HRA to vary based on family-size to help with varying health insurance plan costs).
- The maximum contributions are $4,950 for individuals and $10,000 families.
- Participants, in most cases are ineligible for subsidies under an ‘exchange’ during the months that they are covered by the employer’s HRA.
A full copy of the bill can be found at http://www.ecfc.org/files/HR_34_Cures.pdf