Reinstatement of Health Reimbursement Accounts
In December 2016, Congress reinstated the Health Reimbursement Account (HRAs) for business less than 50 employees. The result is that these firms will avoid large penalties on payments they give to their workers who purchase their own healthcare insurance. Many firms in this category do not offer group health insurance. This law will help them offer benefits to their employees. The reinstated HRAs have more restrictions than the previous program. They are however a very good option for small employers.
Below, the Health Reimbursement Account definition:
A Health Reimbursement Arrangement (HRA), commonly referred to as a health reimbursement account, is an IRS-approved, employer-funded, tax-advantaged employer health benefit plan that reimburses employees for out-of-pocket medical expenses and individual health insurance premiums.
The following are a listing of benefits of a Health Reimbursement Account:
Insurance Premiums can be reimbursed
Medical expenses as defined in the plan
Annual employer contributions for Small Business HRAs are capped at $4,950 for a single employee and $10,000 for an employee with a family.
Health Reimbursement Arrangement balances may roll forward from month to month or from year to year, depending on which HRA plan an employer chooses.
Employers may also allow employees to have access to their Health Reimbursement Arrangement accounts after retirement.