Congress has passed and President Obama is expected to sign the 21st Century Cures Act, which exempts health reimbursement accounts (HRAs) set up by small employers—those with fewer than 50 full-time employees—from the Affordable Care Act’s market reform provisions.
The Senate passed a final version of the bill (H.R. 34) on Dec. 7.
Upside: The $100 per day, per employee, excise tax on any group plan that doesn’t meet those market reforms is wiped out.
Downside: Employers must report their HRA contributions on employees’ W-2s.
These provisions, including the W-2 reporting provision, are effective for years beginning after 2016.
HRAs, which are employer-funded, have given the IRS nothing but heartburn from the onset of health care reform.
The problem: HRAs are considered group health plans, which must meet the ACA’s market reform provisions, primarily that plans not impose dollar limits on annual or lifetime cov...(register to read more)