Beginning at the start of 2017, small businesses can again offer stand-alone HRAs (Health Reimbursement Arrangements) to their employees, thanks to the Small Business Healthcare Relief Act (SBHRA).
These plans were available in the past, but were loosely regulated at the time. Now, with stricter guidelines, HRAs are once again allowed and available in agreement with the Affordable Care Act (ACA).
Small businesses everywhere are taking advantage of the benefits for their employees. Here’s what you need to know about HRAs as a small business.
HRAs can benefit your business and your employees.
One of the most notable benefits of Health Reimbursement Arrangements for small businesses is that they do not require group insurance for employees. In addition, HRAs utilize tax-advantaged funds, which means that funds used for HRAs are tax-free to your business.
Similarly, employees can claim premium tax credits under the ACA, but credits are adjusted based on the employer’s contribution. Also, employees are not disqualified for subsidies through the Marketplace by using an HRA.
HRAs come with stipulations.
Not all businesses will qualify for Health Reimbursement Arrangements. Some of the conditions include:
- Businesses must have fewer than 50 employees.
- Eligible employees must have minimum essential coverage under the ACA (and acquire written proof of coverage).
- HRAs are not pre-funded.
- Companies can contribute up to $4,950 for single coverage and up to $10,000 for family coverage per year.
Small businesses will likely need assistance setting up HRAs.
Due to the new legislation, Health Reimbursement Arrangements are more complicated than in the past. Unless you have a savvy staff member, implementing this plan is likely to be confusing and complicated.
Areas such as registration, reporting coverage, and claim substantiation may cause confusion for many business owners.
That’s where get-benefits can help. Contact us today with questions regarding HRAs and we’d be happy to help your business.
While HRAs aren’t the right fit for every small business, they certainly are perfect for some. Ready to see if a Health Reimbursement Arrangement is right for your small business? Contact us at get-benefits today to learn more.