With the passage of the 21st Century Cures Act small employers will be able to establish Health Reimbursement Accounts (HRA) to provide Premium Reimbursements for their employees’ Individual Health Insurance Plans beginning January 1, 2017. This is subject to President Obama signing the Act into law. This bipartisan legislation is surprising especially since this law will overturn a previous IRS ruling barring employer sponsored HRAs for premium reimbursements and in addition make any potential penalties retroactive before December 31, 2016 null and void based on IRS Notice 2015-17.
In order to establish the new Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), a small employer cannot sponsor any group health coverage and cannot be an Applicable Large Employer (ALE) with 50 or more employees. The HRA fund for employees may also be used for eligible medical expenses not covered by any health plans.
This may help out some small employers but in no way will replace the robust group health insurance market options which are currently available for small employers. This law will definitely be welcomed by employers, agents, brokers, and third-party administrators. This new law will create new opportunities and options for small employers and their employees. Of course, many questions will be asked, while clarifications will be provided by the IRS in the New Year.
President Obama is ending his service with a grand finale, while this bipartisan Congress can be thanked as well for providing us with an end of the year celebration which will make 2017 an exciting time for hope and new opportunities for Working Americans.
This article was originally posted on LinkedIn.