New law clears the way for small businesses to offer standalone HRAs

The 21st Century Cures Act, signed into law on December 13, 2016, includes good news for small businesses that have been prohibited in recent years from providing their employees with HRAs. Specifically, beginning January 1, 2017, qualified small employers can use HRAs to reimburse employees who purchase individual insurance coverage, rather than providing employees with costly group health plans. This article explains why small employers were unable to offer “standalone” HRAs to employees and details the new QSEHRAs.

Various Affordable Care Act (ACA) Provisions

Currently all applicable large employers must offer certain minimum levels of health insurance to their full-time employees or face penalties if at least one of their full-time employees obtains a subsidy to purchase coverage through an exchange.