On December 13, 2016, 44th President of the United States of America Barack Obama signed into law a bipartisan bill that passed through the House with a 392-26 vote and Senate with a 94-5 vote. This law, titled the 21st Century Cures Act, was hailed by pundits of the left and right as an important bill that increases funding for departments in need and potentially and reduces the time to market for lifesaving drugs. However, one of the most important provisions was one talked about less frequently, and it is one that provides help for America’s Main Street and their quest to recruit and retain quality talent.
Qualified Small Employer Health Reimbursement Arrangements (QSEHRA)
The 21st Century Cures Act, or Cures Act as it’s commonly known, includes an important provision allowing small businesses to offer their employees more choices with lower costs.
This provision allows businesses with fewer than 50 FTEs (non-ALE entities) to resume paying their employees’ health insurance premiums without fear of IRS penalties up to $36,500 per employee per year, as discussed in-depth in our blog, Small Business Healthcare Relief in Cures Act. However, the provision does include some pitfalls that employers could fall into if they fail to implement this correctly.
As noted by the EBN Article on the topic, there are a few issues in which employers need to tread carefully:
- Only employers who do not meet the definition of applicable large employer may implement a QSEHRA.
- Employers offering a QSEHRA may not offer any group health plan to some of their employees. If the employer intends to offer a QSEHRA, they must terminate the group health coverage before the QSEHRA goes into effect.
- A QSEHRA can pay for any documented healthcare expense as defined by Section 213(d) of the Internal Revenue Code.
- The employer must cover 100% of the cost of the benefit provided, and cannot allow employees to make pre-tax withholdings or use employee contributions on a pre-tax or post-tax basis.
- Employers can contribute no more than $4,950 per individual or $10,000 per family.
In addition to this, there are a multitude of administrative requirements in order for employers to offer QSEHRAs, including documentation, notice, and reporting requirements.
Learn More about Offering a Compliant QSEHRA: Join Healthcare Trends Institute, Velapoint, and LearnBenefits on February 28
With this provision so important yet so complex for small businesses, we would like to invite you to a free webcast designed to help leaders understand what the provision allowing QSEHRAs means for their business, and how to navigate the landscape for compliance.
Titled “Everything You Need to Know about Small Business HRAs,” this webcast will feature three highly qualified business leaders who will share insights on the provision, as well as how to navigate the landscape as you move forward. Josh Hilgers of VelaPoint, Eric Johnson of LearnBenefits, and Chris Byrd of WEX Health will come together on February 28, 2017 at 4:00 PM CST to discuss how this new law affects your company, as well as:
- Take a look at the new defined contribution rules
- Discuss the possible enhancements that could be included in the ACA replacement plan
- Explain the advantages of this legislation for the consumer driven healthcare industry