HRA Administration for Small Business - HRA Plan Docs

The New HRA for Qualified Small Employers The passage of the 21st Century Cures Act in December of 2016 minted a new HRA benefit, the Qualified Small Employer HRA. The law was essentially a compromise between lawmakers, who understood that small businesses that did not offer traditional group health benefits wanted to provide a non-traditional health benefit, and the Departments of Labor and Treasury, which had issued coordinated guidance in 2013 effectively barring small businesses from using existing tax law under 26 CFR 1.105-11 for tax free reimbursement of medical expenses if the plan had two or more eligible participants. The Departments contended that “old” Section 105 plans were “group health plans” and therefore subject to the ACA’s “market reforms” which apply to all group health plans. To bypass the ACA, congress wrote the “new” law, forming the QSEHRA, under 26 U.S. Code §9831, exceptions to group health plans. The Same but, Different The reimbursement p...

All HRA plans, from the Single Participant 105 plan to the Qualified Small Employer HRA, function in similar ways. Over the years employers have begun to realize the value of the HRA as a total replacement strategy What is a Health Reimbursement Arrangement (HRA)? There are two families of HRA, traditional Section 105 HRAs and Qualified Small Employer 9831(d) HRAs. Both are employer-funded health plans that reimburse employees tax-free for eligible out-of-pocket medical expenses, including individual health insurance premiums. The differences lie in the plan structure, various structures have evolved over the decades to comply with the constantly changing regulatory environment.  How do they work? Employers define a dollar amount they are willing to contribute to employees’ medical expenses. Employees spend money on qualified medical expenses and submit a request to be reimbursed and proof of the expense to the employer or the employer’s claim reviewer. Once approved the company re...