On Dec. 13, 2016, the 21st Century Cures Act (Act) was signed into law. The Act allows small employers that do not maintain group health plans to establish stand-alone health reimbursement arrangements (HRAs), effective for plan years beginning on or after Jan. 1, 2017. This new type of HRA is called a “qualified small employer HRA.”

To be eligible to offer a qualified small employer HRA, an employer must meet the following two requirements:

1. The employer is not an applicable large employer (ALE) that is subject to the ACA’s employer shared responsibility rules. In general, this means that the employer must have fewer than 50 full-time employees, including full-time equivalents.
2. The employer does not maintain a group health plan for any of its employees.

The maximum benefit available under the HRA for any year cannot exceed $4,950 (or $10,000 for HRAs that also reimburse medical expenses of the employee’s family members).

HRA payments or reimbursements must be limited to medical expenses (as defined in Tax Code Section 213(d)) incurred by the employee or the employee’s family members, after the employee provides proof of coverage. This would include, for example, premiums for individual health insurance coverage and other out-of-pocket medical expenses.

An employer funding a qualified small employer HRA for any year must provide a written notice to each eligible employee. This notice must be provided within 90 days of the beginning of the year.

Please see the attached bulletin for additional information, and contact your NEEBCo representative with any questions you have.

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