Cures Act Restores Stand-Alone HRA Plans for Small Employers

APPLIES TO

All Employers of fewer than 50 Full-Time Employees

EFFECTIVE

Effective for Plan Years 2017

QUESTIONS?

Contact HR On-Call

(888) 378-2456

On December 13, 2016, President Obama signed the 21st Century Cures Act (the “Act”), which allows qualified small employers of fewer than 50 full-time employees to offer a stand-alone Health Reimbursement Arrangement (“HRA”) option to employees.  This stand-alone HRA option is available for plan years beginning in 2017 for employers that are not Applicable Large Employers (“ALE”) under the Affordable Care Act (“ACA”).

The Act provides flexibility for small employers who are not required under the ACA to provide health insurance, but still want to provide employees some type of health benefits without suffering a tax penalty. The regulation requires the HRA to be funded solely by the employer.  Employees may be excluded from coverage under certain conditions.  Employers utilizing this HRA option must also provide all eligible employees with notice containing specific information about the benefit at least 90 days prior to the start of the plan year or prior to when the employee becomes eligible.

The Act also grants transition relief for small employers who offer reimbursement of individual health insurance premiums.  Though the IRS indicated such payment plans were not allowed under the ACA, the IRS granted temporary relief for such employer payment plans beginning in 2016.

Finally, in addition to the HRA provision, the Act was intended to speed up medical research and drug and device approvals, and also makes small changes to the Mental Health Parity and Addiction Equity Act (“MHPAEA”) and the Health Insurance Portability and Accountability Act (“HIPAA”).  These changes are meant to ensure that mental health and substance abuse disorders are treated fairly by insurance companies.

Action Items

  1. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2017 ManagEase, Incorporated.

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