A provision of the 21st Century Cures Act re-opens for small employers the opportunity to reimburse medical insurance premiums for employees including premiums in the individual market. Employers are expected to take advantage of this new opportunity that will help them attract and retain talent.

The Act, created a new hybrid HRA entity called a Qualified Small Employer Health Reimbursement Arrangement, designed specifically to allow non-ALE (less than 50 eligible employees) entities to resume paying for individual health insurance premiums for their employees.

It gives small employers — those with fewer than 50 full-time employees — greater flexibility to offer employees a healthcare plan and helps employees purchase a plan directly on the individual marketplace or through Healthcare.gov.

While the Act provides an option and is not a mandate, many small employers are going to start offering the money — with a maximum cap of $4,950 for single employees and $10,000 for employees with families — to their employees.

Previously, prior to the ACA, it was common for small employers that didn’t offer a group medical plan to reimburse employees for some or all of the premiums they paid for individual medical policies however IRS regulations issued under the ACA effectively barred that practice. This new law reinstates that option.

We can assist your company with reviewing and installing a compliant HRA program. The penalties for an improper program can be stiff. Please give us a call at (877) 424-3026.