The Small Business Healthcare Relief Act (SBHRA) is pending legislation that would create a new Small Business HRA.
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We hope you learned more about the pending legislation and how the Small Business HRA would work.
If passed, the new Small Business HRA would be available to qualified small employers starting January 1, 2017.
A Small Business HRA is an employer-funded, tax advantaged health benefits plan used to reimburse employees for out-of-pocket health insurance premiums and medical costs. (For background, see: Health Reimbursement Arrangement (HRA) - What is it?)
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 $5,130 for a single employee and $10,260 for an employee with a family. 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 Small Business HRA, click here.
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