The President has signed legislation allowing small employers with no group health plan to offer their employees a stand-alone health reimbursement arrangement (HRA) to help pay for medical care expenses—including Exchange coverage. The legislation also covers a broad range of other health-related topics, including medical research, drug development, mental health care, and Medicare. Here are highlights of the small employer HRA provision and other provisions that may affect employers and their advisors.
The QSEHRA provisions allow small employers that are not subject to health care reform’s Pay or Play provisions to offer some relief for employees’ health care costs without having to provide a group health plan. The new law sidesteps health care reform guidance prohibiting the pre-tax funding of individual policies. Target employers who will benefit the most from this new law will be small employers with a high percentage of lower income wage earners who do not provide group health insurance. This will allow them to provide supplemental health insurance funding for employees who go to the Exchange and receive a subsidy for their health insurance. Please note that QSEHRAs do NOT allow for reimbursement of individual premiums.
The prospect of fundamental changes to health care reform under the Trump administration creates some uncertainty regarding the ultimate impact of this legislation.