How Do Small Business Health Reimbursement Arrangements Work?

How Do Small Business Health Reimbursement Arrangements Work?


How do small business health reimbursement
arrangements, or HRAs, work? A federal law passed at the end of 2016 known
as the “21st Century Cures Act” provides small businesses with a potential new way
to help their employees pay for health insurance. Under this law, qualifying small businesses
can use health reimbursement accounts, or HRAs, to help their employees buy health insurance
and pay for health care related expenses. Here is how it works. A qualifying small employer opens an HRA account
on behalf of an employee. Then, in 2017, the employer can put up to
$4,950 into the account for a single employee, or $10,000 for an employee with a family. The employee can then buy their own individual
or family health insurance plan. And, they can use the money in their HRA to
pay their monthly premiums or certain out of pocket costs
Be aware that employees who receive HRA contributions typically won’t be eligible for government
subsidies when buying coverage on their own through a government exchange. However, employees can shop for individual
or family coverage on non-government exchanges like eHealth.com or when buying directly from
an insurance company. Although federal law allows HRAs to be used
in this way, HRAs may not be an option in all states because some state laws restricting
HRAs have not yet been updated. For more information about Health Reimbursement
Arrangements for small businesses, speak with an accountant or a tax or legal advisor. To learn more about your small business health
insurance options today, visit eHealth.com or speak to one of our licensed insurance
agents.

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