Some Rare Good News for Small Businesses Paying Employee Health Costs

via Wall Street Journal

Small businesses can once again use pretax funds to reimburse workers for health-care costs, especially premiums for individual and family coverage.

In a little noticed move, Congress late last year reauthorized Health Reimbursement Arrangements for businesses with fewer than 50 employees. As a result, these firms won’t risk large penalties on payments they provide to workers who purchase their own health insurance. Many of these firms don’t offer group-health plans, and this law enables them still to offer a health-care benefit.

These HRAs are different from commonly used Health Savings Accounts, which must be combined with a high-deductible health plan. Reinstating HRAs will cost the government about $235 million in lost revenue over five years, according to estimates by the Joint Committee on Taxation.

HRAs were widely used until the Affordable Care Act, commonly called Obamacare, threatened companies with penalties as high as $36,500 per employee, a year, if the arrangements didn’t conform to ACA requirements—and often they didn’t.

Read the full article here


About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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