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Penalties for Small Business Health Reimbursement Arrangements (HRAs)

Posted by Admin Posted on Dec 19 2016

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Health reimbursement arrangements (HRAs) enable small businesses to contribute to employee health care expenses, including premiums, deductibles and other out-of-pocket costs. Unfortunately, up until now, employers with HRAs have faced the threat of potential hefty penalties of up to $36,500 per employee per year because the arrangements violate the rules for group health plans under the Affordable Care Act.

The law exempts qualified small employer HRAs as long as the employer is not already subject to the ACA’s employer mandate and doesn’t offer an employee group health plan. Qualifying HRAs must also be funded only by an eligible employer and reimburse medical expenses that don’t exceed $4,950 a year ($10,000 for families). HRAs can help small companies attract and retain great people because they demonstrate their commitment to employees. If you would like more information about HRAs or other health care coverage options for your business, be sure to contact us today.