In case you missed our recent blog posts (Breaking News: 21st Century Cures Act Ushers in New Era for Employer-Provided Health Insurance and New Law Eases Small Business Health Care Burden: Here’s How), exciting things are happening in the world of health insurance and for many small businesses this means more cost control and more choices.
On December 13, the 21st Century Cures Act was signed into law by President Barack Obama. A provision within this law allows eligible employers to now offer their employees pre-tax dollars to pay for individual health insurance premiums through a Health Reimbursement Arrangement (HRA). We believe this is a great option for many small businesses and their employees, so we’re excited to offer it effectively immediately.
Is This For My Business?
Employers who are not considered Applicable Large Employers (ALEs) are eligible for the Small Employer HRA. Generally, ALEs are employers with 50 or fewer full time equivalents (FTEs). [For larger employers, Gravie has similar options – contact us to learn more.]
How Does Gravie Help?
- Determine if you are eligible to offer the Small Employer HRA.
- Assist in structuring employee dollars in a compliant manner.
- Help you identify which employees you need to make the HRA available to.
- Provide guidance in notifying employees of the Small Employer HRA offerings and help them enroll.
- Administer the HRA and process the HRA payments for your employees.
Other Common Questions
Q. Who qualifies for the HRA?
A. Employers who are not considered Applicable Large Employers (ALEs) are eligible for the Small Employer HRA. Generally, ALEs are employers with 50 or more full time equivalents (FTEs).
Q. Is the employer contribution tax-deductible to the employer?
A. Yes. Employer contributions to the Small Employer HRA are not considered compensation and therefore are not subject to FICA and other fees/taxes.
Q. Can my employee contribute to the Small Employer HRA?
A. No. The HRA is funded solely by the employer.
Q. What if my employee’s premium is greater than the amount given through the HRA?
A. The rest of the premium must be paid for with post-tax compensation.
Q. I want to give my employees more than the HRA’s annual maximum; can I do this?
A. Yes, but any money given above the $4,950/10,000 single/family maximum must be given as additional, post-tax compensation.
Q. Can the HRA funds be applied to deductible and out-of-pocket maximum?
A. No. The law limits the use of the HRA to be used only on individual premiums. However, employees do have a wide array of plan choices and Health Saving Accounts through Gravie. We help our members understand and select the best plan for their budget and needs.
Q. Can the HRA funds be used on a spouse’s group plan?
A. No. The HRA funds can only be used on individual premiums.
Q. Can I only offer the Small Employer HRA to full-time employees?
A. You must offer the HRA to all full-time employees, but you can also choose to offer it to employees who do not meet full-time status.
Q. What happens to unused employer dollars if the employee leaves the company?
A. The funds stay with the employer.
Q. Are Medicare-eligible employees eligible for the HRA?
A. Yes. Medicare premiums are eligible expenses under the Small Employer HRA.
Q. Do I need to payroll deduct the employer contribution for my employees?
A. No. Employer contributions are given through the HRA, and do not need to be applied to payroll.
Q. Am I required to offer COBRA if we offer the Small Employer HRA?
A. No. Most HRAs require employers to offer COBRA. However, an exception was established for the Small Employer HRA. You are not subject to COBRA if you offer the Small Employer HRA.
Interested in learning more about Gravie’s pre-tax solution for small businesses? Join us for an upcoming webinar – What Employers Should Know About the Cure’s Act & Why This New Law Means More Affordable, Broader Options for Employee Benefits or contact us today.
Wednesday,February 8, 12:00 PM CT
Wednesday, March 1, 12:00 PM CT