Recent health-care reform initiatives, including the passage of the 21st Century Cures Act in December 2016, have ushered in significant changes that will affect the health insurance industry through 2017 and beyond. One of the new changes includes updates to Health Reimbursement Arrangements (HRAs), one of the best ways for small businesses to offer health benefits to their employees. Here are four things to know about HRAs and changes in health law for 2017.
#1) Integrated HRAs
Integrated HRAs are compliant in 2017.
An Integrated HRA—which may also be called a deductible-only HRA, linked HRA, or Group HRA—is an HRA linked with a high-deductible group health insurance policy. The Integrated HRA is available only to those employees who use the company’s group health insurance policy as a supplement to help with deductible costs.
With respect to health reform, businesses should work with their broker to ensure that their group health insurance policy, combined with the Integrated HRA, meets all health reform requirements.
#2) Retiree HRAs
Retiree HRAs are compliant in 2017.
With a Retiree HRA, the HRA is designed to reimburse employees only after retirement. Under IRS rules, businesses can continue to offer a tax-advantaged HRA to retired employees as long as the HRA is designated as a retiree-only HRA. This means that businesses must ensure their retiree-only HRA is administered separately from an HRA for current employees.
Businesses should work with their HRA administrator to make sure their Retiree HRA is in compliance with current health laws.
#3) Small Business HRA
Small Business HRAs are compliant in 2017.
Created by the Small Business Healthcare Relief Act (SBHRA), the Small Business HRA is a new kind of HRA available to businesses with fewer than 50 employees
The Small Business HRA allows businesses to reimburse employees who purchase individual health insurance plans. Company contribution amounts are capped annually at $4,950 for single coverage and $10,000 for family coverage.
Employees who participate in a Small Business HRA can still claim premium tax credits under the Affordable Care Act (ACA), however, tax credits are adjusted by the amount of the company’s contribution. See How to Calculate Your Premium Tax Credit with a Small Business HRA.
#4) One-Person Stand-Alone HRAs
One-Person Stand-Alone HRAs are compliant in 2017.
One-person stand-alone HRAs are exempt from PHS 2711 annual limit regulations, and are still compliant. In other words, if a small business or non-profit stand-alone HRA only has one participant, they can continue to offer the stand-alone HRA in 2017. That's because the Technical Release clearly states that the new market reforms only apply to health plans with two or more participants.
Editor's Note: This post was originally published in January 2014 under the title "4 Things to Know about HRAs and Health Reform in 2014."
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