Today’s update is about a new Health Reimbursement Arrangement (HRA) available to small employers. Beginning January 1, 2017 qualified small employers may be eligible to offer their employees a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) to help their employees cover certain medical expenses including individual health insurance premiums. The law, part of the 21st Century Cures Act, revises a previous law which prohibited small employers from offering an HRA plan to reimburse for health insurance coverage.
The following is a list of the major elements of the law:
- Only small employers (less than 50 Full-Time Equivalents) that do not sponsor a group health plan are eligible;
- Must be 100% employer funded (no employee contributions are permitted);
- Must be provided on the same terms to all eligible employees but dollar amounts may vary based on the cost of insurance tied to the employee’s age and number of dependents;
- Employers may exclude employees with less than 90 days of service, under age 25, part-time and seasonal employees;
- The employee must provide proof of coverage;
- The amount of payments and reimbursement for any year cannot exceed $4,950 for single coverage or $10,000 per family, to be adjusted annually for inflation;
- And other requirements.
Employers that are planning to offer this benefit are required to provide each eligible employee with a written notice at least 90 days before the beginning of the plan year, however for the 2017 plan year the deadline is mid-March 2017.See the link below for information.
Please note that EBS is sharing this information to assist you with your compliance planning. We recommend that you contact your legal counsel with specific questions relating to this law.
Ellen E. McPherson
Employee Benefits Solution