Currently under the Affordable Care Act, Health Reimbursement Arrangements (HRA’s) are outlawed. But with new legislation, The Small Business Healthcare Relief Act (SBHRA), which just passed the House of Representatives with broad bi-partisan support, HRA’s or more specifically, Qualified Small Employer Health Reimbursement Arrangement’s (QSEHRA) will be available to small employers which will benefit their employees and their families greatly. The benefits of employers using HRA’s are enormous, some key advantages are, exemptions from group health plan requirements and all the paperwork, additionally they allow businesses to use pre-tax dollars to assist employees purchasing individual health policies and out-of-pocket medical expenses. Under the ACA, Obamacare, if an employer has a group health plan, no full-time employee can access for themselves or their family an advanced premium tax-credit from individual health plans that lowers their insurance cost significantly. So, if you are a small employer and offer a health plan, you are effectively barring your employee and their family from receiving premium assistance through the exchanges, commonly known as the “Family Glitch” in the Affordable Care Act. Please note, in most cases, it’s illegal for an employee or their family to receive a subsidy for an individual health plan while employed by an employer who offers a health plan at its open enrollment.
This legislation will greatly enhance and expand coverage to disaffected employees, allow Health Savings Accounts, establish a Defined Contribution platform that employers can control and forecast healthcare expenditures and have a true Cafeteria Plan that employees can choose benefits from an expanded variety of plans customized to their particular needs, but most significantly, the benefits are tax-free just like employer group plans and section 125 arrangements.
Thus, if you are an employer that currently offers a health plan, an HRA will make your business a lot easier to operate, and if you don’t have a health plan in place you can help your employees get pre-tax benefits by establishing an HRA.
SBHRA is now poised to go to the Senate for a vote sometime in September. We urge you to contact your members of Congress and support this critical legislation.
To learn about the Senate co-sponsors and read the entire bill visit: https://www.congress.gov/