August 23, 2017
If you are a small employer currently planning for open enrollment and faced with ever-rising healthcare costs, you should read this article for an alternative solution. Likewise, if you are an employer that used to provide a health reimbursement arrangement (“HRA”) as a method to help your employees with their benefit needs, then you are keenly aware that your ability to provide this option ended with the Affordable Care Act (“ACA”). However, keep reading, because this article will provide you some welcome news.
Brief Background on HRAs
HRAs are a funding tool that many employers used in conjunction with providing health plan coverage as a means to assist employees with the extraordinary costs of healthcare. Now HRAs are all but extinct. This is because HRAs had to comply with the coverage requirements ushered in with the ACA (for example, providing for preventative care at 100% cost, providing full coverage for essential health benefits with limits on the costs that could be imposed on employees, etc.), which made HRAs truly unaffordable for employers.
21st Century Cures Act – Effective January 1, 2017
The good news is that Congress enacted an exception for eligible employers to provide an HRA that does not have to satisfy the ACA provisions. An eligible employer is defined as an organization that does not satisfy the definition of an “applicable large employer” used under the ACA. This generally means that if you employ less than 50 full-time employees (on average 30 hours or more per week) AND you do not offer health plan coverage to employees, then you can provide an HRA to your employees.
Here is the fine print. The HRA must:
If you decide to provide an HRA, please note that you must provide notices to eligible employees at least 90 days in advance of the effective date of the HRA. The notice must include the following statements:
If you have any questions regarding permissible HRAs for eligible small employers, please contact a member of the Krieg DeVault Benefits Group.