In recent months, helping small Act Healthcare companies bipartisan (SBHRA) began to pick up speed with increased coverage and a number of co-sponsors. If passed, the SBHRA provide small business owners can use the reimbursement of medical arrangements to help employees with insurance costs and outputs of health care 
pocket health. Introduced on 25 June, 2015, the Law on emergency health care for small businesses has been referred to the respective congressional committees for review and boast nearly 100 co-sponsors in the House and Senate. If you are interested in learning more about the bill, see the following FAQs.
1. What is a Health Reimbursement Arrangement (HRA)?
An HRA is an arrangement that is funded solely by an employer reimburses an employee for expenses of health care, such as Medicare premiums, co-pays, deductibles, and other medical expenses allowed under the Internal Revenue code (IRC) Section 213 (d) incurred by the employee and his / her spouse. The value of an HRA is determined by the employer. As the premiums paid under the coverage provided by the employer, repayments under an HRA are (as defined in section 105 IRC) tax free.
There are two types of integrated and autonomous HRAs-. Generally, to be considered as an integrated HRA, an employee receiving employer contributions by an HRA must be enrolled in an available group health plan or by his / her employer or the employer of the spouse of 'employee. A standalone HRA is not connected to a coverage offer and may be used to pay qualified medical expenses, regardless of whether the employee is enrolled in a health insurance plan.
Under the notice 2013-54, the IRS and DOL has allowed the continuation of integrated CRH CRH and autonomous retirees. However, the notice prohibits the pursuit of self CRH for non-pensioners.
2. Why HRAs have been prohibited by the IRS?
According to the IRS and DOL, CRH are generally regarded as collective health plans, and therefore, subject to market reforms apply to group health plans that have been adopted under the Act affordable care (ACA), including the prohibition of annual limits on essential benefits and the obligation to provide without cost-sharing preventive services. Since CRH are not traditional health insurance, but rather a means to obtain insurance on the private market, or expenses / shift related to health care, the IRS and DOL, in the opinion in 2013 -54, argued that these accounts do not meet the health plan of the group requirements. If an employer continues to offer a plan that is in violation of the requirements of the group health plan, and the excise tax of $ 100 per day, per employee is available.
Before (ACA), CRH had few requirements other than requiring every pocket costs for qualified medical expenses defined under IRC Sec. 213 (d).
3. How the Law on emergency health care for small businesses (SBHRA) modify and / or to comply with IRS guidelines?
- HRAs Removes the definition of group health plan for employers with fewer than 50 employees and therefore not subject to the mandate of the employer. This ensures that employers are not subject to the excise tax for failure to comply with the requirements of the group health plan.
- Allows HRAs reimburse employees who purchase health insurance on the individual market, and pay related costs outside pocket health permitted under IRC sec. 213 d) the employee is enrolled in a qualified health plan.
- Keeps the requirement of IRS employees maintain health insurance as a precondition to using the HRA. Maintains the ban that the employee can not use both HRA and premium tax credits.
4. Could employers use health reimbursement arrangements (HRA) before the implementation of the Affordable Care Act (ACA)?
Yes. While the vast majority of employers, regardless of size, offered self-insured health plan or a traditional group, a small minority of small employers provided their employees and / or retirees with CRH because of the administrative burden and global financial provide traditional health insurance. These arrangements also available to employers and employees flexibility choice.
5. Who can be authorized to use the HRA accounts
Employers :? The bill provides HRAs to be offered by employers with fewer than 50 employees, and therefore not subject to the mandate of the employer. Under the ACA, employers with fewer than 50 employers are not required to provide health coverage. However, many were offering and would like to continue to offer their employees financial assistance to purchase health coverage
employees :. The bill allows employees to use HRAs only if they have and maintain coverage through a qualified health plan, including Medicare.
6. Employees enrolled in the HRA accounts eligible for premium tax credits on the exchange?
No. The bill prohibits "double dipping", which means that the employee can not use an HRA and tax credits on contributions. An employee is also eligible for tax credits premium if coverage purchased using the HRA is considered affordable. As the ACA, coverage is considered affordable if the employee contribution to cover the self-only does not exceed 9.5% of the employee's household income. As part of determining affordability, the amount of the HRA must be considered, as well as the use of a benchmark index which is the average cost of second silver map below.
If determined not to be affordable coverage, an employee may be eligible for premium tax credits, but can not use the HRA of the premium.
7. What happens if an employee uses the HRA, but does not participate in a qualified health plan or coverage drops at some point during the year?
The legislation requires employers to verify employees and to provide annually a proof of coverage for subscribers at HRA. Employers are also required to provide notice to employees regarding the eligibility requirements for registration and using an HRA. If an employee falls coverage during the year for reasons that do not exempt him / her from the individual mandate, and continues to use the HRA, the HRA is taxable to the employee on a proportional basis.
- If an employee falls coverage in the first quarter of the year, 75% of the HRA becomes taxable
- If an employee falls coverage in the second quarter of the year, 50% of the HRA becomes taxable
- If an employee falls coverage in the third quarter of the year, 25% of the HRA becomes taxable
- If a drop employee coverage in the fourth quarter of the year, the employee is sure-fed and HRA remains tax-free. This aligns with the requirement of individual mandate, which is based on nine months of coverage.
8. The employer contributions to CRH subject to the excise tax on high-cost plans (ie the Cadillac tax)?
Yes. Under the bill, employers' contributions to CRH is subject to the excise tax. However, employee contributions in the form of expenses out of pocket are not subject to the excise tax. For example, if an employer offers an HRA in the amount of $ 3,000 and the employee buys an insurance plan with a total cost of $ 3,500. out-of-pocket costs of $ 500 for the employee are not included in the amounts subject to the excise tax.
9. What impact this bill will have on the market for small groups?
According to the US Department of Health and Human Services (HHS), only 32 percent with less than 50 employees currently offer health insurance. The remaining companies were either CRH offer or choose / chose not to offer health benefits to their employees.
Recognizing the financial and administrative challenges small employers face, ACA has created the Small Business of the health options program (store) to provide a market for businesses to find affordable health care for their employees. Moreover, the ACA has created tax credits for small businesses to help offset the cost of health insurance for employees. However, these tax credits are temporary companies (two years) and smaller are not eligible for credits due to limitations on wages and employee size (less than 10-25 full-time employees who are paid an average of $ 25,000- $ 50,000 or less). Since the implementation of the ACA, exchange Store has had challenges, and therefore, registration and participation has been and continues to be low and not a viable option for most small employers. In addition, a few states have chosen to operate a SHOP market.
The small group also faces challenges that led to instability and costs (rating ie, composite) increased. The ACA also acknowledged the current and future challenges of the market and small groups of states offered the possibility of merging the individual and small group markets.
As the economy emerges from recession, the skilled labor shortage in all sectors of the economy require employers to be competitive. Employers with less than 50 employees are competing with employers with a little more than 50 employees (and required to offer a traditional health plan). Therefore they have to offer strong and consistent health benefits to attract and retain good talent. If employers currently offer coverage, they are likely to maintain the supply cover. Employers who decide to eliminate health benefits without considering the impact on their employees, although the right to do so without penalty, would mercilessly. If an employer decides not to offer traditional insurance benefits, providing HRA provides continuity of coverage, the participation of the employer, the employee choice and portability.
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