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Tuesday, 10 January 2017 23:43

21st Century Cures Act and Small Employer HRAs

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The 21st Century Cures Act was signed into law on December 13, 2016 by then President Obama. The bulk of the Cures Act covers areas such as medical research and drug and device approvals. This new law also revokes a ban in effect since 2014 on small employer pre-tax funding of individual health insurance premiums. Beginning in 2017, this new act will allow small employers to create “Qualified Small Employer Health Reimbursement Arrangements” or “QSEHRAs.” 

Requirements for small employers: 

  • Must be a small employer (i.e, must have fewer than 50 full-time employees and full-time employee equivalents)
  • The small employer cannot offer a group health plan
  • All full-time employees must be eligible 
  • The waiting period must be no more than 90 days of service with certain permitted exclusions 
  • The small employer must fund it solely with no employee contributions
  • The annual max is $4,950 per single employee and $10,000 per employee with dependents 
  • Reimbursement is tax-free to the employee (the employee must be enrolled in an essential health coverage)
  • The QSEHRA benefit can be changed based on the cost of individual insurance in the applicable market due to age and number of enrolling family members. 
  • Notice must be provided to employees at least 90 days before a plan year that includes information about the QSEHRA and the reimbursement amount

The arrival of QSEHRAs offers a new platform for small business owners to deliver competitive benefits to their employees. While going this route might seem like a win-win, it does come with some disadvantages. Several concerns include:

  • unpredictable cost increases of the individual market;
  • the fact that in Colorado there are no PPO plans in the individual market;
  • the strong likelihood that these plans would be subject to ERISA and COBRA;
  • and the potential disruption to the individual market that may come with the repeal and replacement process taking place now in Congress. 

Working with a qualified insurance broker who can offer you all the options, is up-to-date on new legislation, and can help examine what’s right for your business might be a great starting point in understanding this new act. Please give us a call at (303) 369-3200 or This email address is being protected from spambots. You need JavaScript enabled to view it. us with any questions.

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Read 1890 times Last modified on Monday, 14 September 2020 19:28