In December 2016, before President Trump took office, former President Obama signed the 21st Century Cures Act. While most of the bill covers health initiatives and focuses on finding cures and various health treatments, there are six pages that focus on small business owners and Health Reimbursement Arrangements. The bill introduced the Qualified Small Employer Health Reimbursement Arrangement or QSE HRA. As you might know, the Affordable Care Act enforced penalties for employers that utilized HRAs and employers that had these plans risked huge fines and penalties. However, these six pages have brought the HRA option back, increasing options for covering the cost of healthcare.
Market research shows 10 million stand-alone HRAs were dropped with the passage of the
ACA, so BASE® is excited at the opportunity to bring this to the market. Our
goal is to help make healthcare more affordable. Thanks to this
legislation, employers can help their employees pay for qualified medical
coverage for themselves and their families, tax-free. The employees can use the
money for insurance premiums, co-pays, deductibles, eye care, dental care, or
any other qualified healthcare expense. The amount provided is tax-free to the
employees and 100% tax deductible to the employer.
QSE HRA allows
employees to take control of their own insurance and pick the medical coverage
that best suites them, while also saving employers money. It allows employers
to provide up to $4,950 in medical reimbursement per-year for individual
workers who show they have individual coverage and $10,000 per year for workers
who show they have family coverage.
An employer is eligible to establish a QSE HRA if:
- Employer has less than 50 Full Time Equivalents (FTEs)
- Employer does not offer a Group Health Plan to its employees
to Chatrane Birbal, the Society for Human
Resource Management’s senior advisor for government relations: “For eligible
small employers, this new law is welcomed and overturns guidance previously
issued by the Internal Revenue Service and the Department of Labor that stated
that HRA arrangements violated the ACA insurance market reforms, subjecting
small employers to a penalty for providing such arrangements. This change
provides small employers greater flexibility in terms of benefit offerings and
allows eligible employers to use HRAs to help employees purchase an affordable
health insurance plan that fits their individual budget and health care needs.”
Now that qualifying small employers no longer have to worry about penalties from the IRS or DOL, they can offer their employees a better option for rising health costs. Contact a BASE® representative to find how to lower healthcare costs with the QSE HRA.