On December 13, 2016, President Obama signed into law the “21st Century Cures Act” which allows small employers without group medical plans to reimburse individual premiums and other medical expenses of employees under health reimbursement arrangements (“HRAs”), effective with the 2017 plan year, and provides relief from penalties to all small employers reimbursing individual premiums of employees for earlier plan years. In addition, the Cures Act provides a medical innovation package that funds medical research, accelerates cutting-edge treatments for rare diseases, and makes significant reforms to the mental health system.
The Issue An employer cannot offer employees cash to reimburse the purchase of an individual policy, without regard to whether the employer treats the money as pre-tax or post-tax to the employee Such arrangements are subject to the market reform provisions of the Affordable Care Act (“ACA”), including prohibition on annual limits and the requirement to provide certain preventive services without cost sharing with which it cannot comply. Such an arrangement may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee). There was relief from this rule afforded to small employers that expired July 1, 2015. An HRA must also be integrated with a group medical plan.
That has now changed! Please click the link below for the details by downloading the bulletin.