The Small Business Healthcare Relief Act (SBHRA) is pending legislation that would create a new small business HRA, the qualified small employer health reimbursement arrangement (QSEHRA).
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We hope you learned more about the pending legislation and how the QSEHRA would work.
If passed, the new QSEHRA would be available to qualified small employers starting January 1, 2017.
A QSEHRA is an employer-funded, tax advantaged health benefits plan used to reimburse employees for out-of-pocket health insurance premiums and medical costs.
The HRA would be available to small employers (with fewer than 50 full-time employees) who do not offer a group health plan to any of its employees.
Employers could use the HRA to reimburse employees tax-free for health insurance premiums and other out-of-pocket medical expenses.
Employer annual contributions would be capped at $5,150 for a single employee and $10,450 for an employee with a family in 2019. HRAs are 100% employer-funded; employee contributions are not allowed.
Participants in the HRA are required to have "minimum essential coverage" to receive HRA reimbursements tax-free.
The HRA would not disqualify participants from the premium tax credits; however, the monthly HRA contributions will be included in an employee's income calculations for determining his or her tax credit eligibility and amount. Additionally, if an employee is eligible for a premium tax credit, the amount of the credit will be reduced dollar-for-dollar by the monthly HRA amount.
Generally, a company must make the same HRA contributions for all eligible employees. However, amounts may be varied based on family status.
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For more information on the SBHRA or the QSEHRA, click here.
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