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Small Employer HRA Update & FAQs (QSE HRA)

Introducing the new Small Business HRA from Core Documents.

On Tuesday, December 14, 2016, President Obama signed into law the Small Business Healthcare Relief Act (formerly H.R. 5447) as Title 18 of the 21st Century Cures Act. The law brings much-needed health insurance relief to small business owners looking for an affordable way to provide health benefits to employees in the form of a new Qualified Small Employer HRA (QSE HRA) plan.

The majority of small business owners have always wanted to offer some form of health care benefit to their employees but rising costs often made that impossible for them. The Health Reimbursement Arrangement (HRA) was always a promising tool, but requirements placed on the HRA by the Affordable Care Act (ACA) made it unusable without first providing group insurance coverage, and premium rates were soaring under Obamacare.

The small business provision of the 21st Century Cures Act rolls back those requirements and expands how the already popular Health Reimbursement Arrangement (HRA) can be used by even more businesses with fewer than 50 full-time employees.

These plan documents will make it easy for an entirely new group of small business owners to set up and administer the new Small Business HRA benefit for their employees.

To celebrate these changes in the law governing HRA’s, Core Documents offers a new Small Employer HRA package at the low introductory rate of $199 (with no annual renewal fee).

If you are one of these newly-eligible employers, you probably have a lot of questions on exactly how the new Small Employer HRA can help you and your employees. Following is a set of FAQs relating to the Small Employer HRA and what it can do for you.

New Small Employer HRA FAQs

How does the 21st Century Cures Act expand the HRA for small business owners?

Prior to implementation of the Cures Act, employers could not provide an HRA to help employees cover their health care costs unless it was alongside an employer-sponsored group health insurance plan. If the employer could not afford  a group health insurance plan, they were prohibited by the ACA to use an HRA to provide health care reimbursement benefits to employees; it was all or nothing. In the face of skyrocketing premiums under Obamacare, many small businesses were prohibited from providing any help to their workers.

Under the Cures Act, employers can fund a QSE HRA to help employees buy their own health insurance through an agent, broker, or on the ACA Marketplace as well as reimbursing qualified medical expenses. There is no longer an ACA requirement to first pay for a group insurance plan.

How does this benefit me and my employees?

Employers previously hamstrung by the ACA group benefit requirement can now use the new Small Employer HRA to help employees purchase health insurance and to reimburse their medical expenses.

Who is eligible to establish a QSE HRA?

Any business owner with fewer than 50 full-time employees can use the new Small Employer HRA to reimburse employees for health care expenses.

Who contributes funds to a QSE HRA?

The HRA can only be funded by employer contributions. Employees cannot add their own funds to the account.

Are there annual contribution limits to the Small Employer HRA?

Yes. An employer can provide up to $4,950 toward individual coverage or $10,000 toward a family plan, per plan year, to help employees purchase health insurance or reimburse medical expenses. These amounts are indexed for inflation and may change annually.

Do these contributions expire at the end of the plan year?

Funds made available to reimburse employee medical expenses may expire at the end of the year or roll over to the next year. That decision is entirely up to the employer.

Which employees can be covered?

Any employee of the company having their own health insurance already purchased either on the independent health insurance market or through an ACA exchange.

Does this impact my employees who buy health insurance on the independent market?

Yes. It gives them additional funds to pay the insurance premium or to reimburse qualifying medical expenses.

What about employees that currently purchase health coverage on the ACA Marketplace?

Employees that have been purchasing their individual or family health insurance plans on the ACA Marketplace may continue to do so, now with additional employer-funded HRA benefits.

Will my employees that currently get a tax credit to help purchase marketplace plans still get it?

Yes; however, the amount of the credit will be reduced dollar-for-dollar by the amount of the HRA benefit. And yet, in every case, the employee comes out the same or better with the new Small Employer HRA benefit applied.

The following examples show how this works.

Adam, Betty, and Chris work for ABC Company. They all buy the very same health insurance coverage on the ACA Marketplace with a $750 monthly premium. Each gets a different tax credit to help pay for insurance, but all three have the same $400 per month benefit to use under their company’s new Small Employer HRA plan.

Adam’s Net Premium Cost in both cases is $150:

adam1  Example of new Small Business HRA applied to employee insurance premium.

 

Betty’s Net Premium Cost in both cases is $350:

betty1

betty2

 

Chris’s Net Premium Cost drops $400 with a QSE HRA in place:

small employer hra example

chris2

 How does this change my company’s current HRA?

It doesn’t. If you are happy with the HRA you have now, you can keep it — and this time there’s no bait-and-switch.

Can I keep my stand-alone, one-person HRA?

Yes. No changes were made to the stand-alone, one-person plan.

When does the new Small Employer HRA provision take effect?

January 1, 2017.

How do I set up a Small Employer HRA?

If you are as convinced as millions of other small employers that the updated QSE HRA plan is right for you, place your order today and we will start preparing your plan documents package. Just choose the method of ordering that works best for you:

How much does it cost to set up the new Small Employer HRA plan?

Core Documents’ Small Business HRA package is available at an introductory low price of just $199 (with no renewal fee).

3D_0008_qse

 Limited Time Offer at $199

Online ordering button -- QSEHRA plan documentspayment logos

 Our friendly and knowledgeable staff is available to

answer any questions you may have via e-mail or phone call,

Monday through Friday, 9 am to 5 pm ET:

Contact Form

1-888-755-3373

coreservice@coredocuments.com

Core Documents will notify you when there are sufficient changes in the Code to require amending and restating your Plan.  You can amend and update anytime for just $199, and only when necessary which is the most cost effective way to establish and maintain a HRA Plan.

*Most documents go out the same day via email within hours M-F. Orders placed on the weekend will be emailed Monday morning. Keep in mind that December, January, and February are our busiest months of the year and documents are processed in the order they are received. The Rush Order fee ($25) simply brings your document to the top of the stack to be processed immediately.

How can I learn more about the new Small Employer HRA and HRA’s in general?

By reading Core Documents’ articles and blog posts on the topic, including:

QSEHRA: The Stand-Alone HRA Returns

New Small Business HRA (SBHRA) Plan Document Available for Special $199 Introductory Price Once Approved by the White House

HRAs remain good tax savings option for small business

FSA, HSA, and HRA: What’s the difference?

Guidance on HRAs, FSAs and the Affordable Care Act (ACA)

Meet Core Documents

3D_0008_qseCore Documents, Inc. has been providing free consulting, affordable plan documents, and plan updates as needed for Section 125 Cafeteria Plans and Health Reimbursement Arrangements since 1997.

Core Documents retains the services of several ERISA Benefit Attorneys for up to the minute commentary on issues affecting plan document language and administration.

All of our plan documents have been thoroughly reviewed by numerous CPAs and law firms who have found them to be clear, concise, compliant and cost effective.

Our Mission

Core Documents is committed to helping our clients and their employees reduce income tax liability with compliant Plan Documents and Summary Plan Descriptions that allow them to deduct insurance premiums, out-of-pocket medical expenses, dependent care expenses, and commuter and parking expenses before payroll taxes are calculated.

Our Clients

Our clients include small employer groups, PEOs, national payroll companies, certified public accountants, third-party administrators, agents, brokers, a network of hundreds of Flex Affiliate websites, and law firms.

Many PEOs, payroll companies, CPAs, accountants, and attorneys private label Core Documents’ plans to their clients through our Flex Affiliate program.

Our Market

We sell documents and annual document maintenance, as well as state-of-the-art web based administration services, and do-it-yourself Excel administration software. Our target market is the small employer, normally with less than 100 employees. We offer online ordering at our website as well as a fax order form (.pdf download).

Our Founder

 The President of Core Documents, Gene C. Ennis,  has held:

Gene C. Ennis, founder and president, Core Documents, Inc.

 ♦  Certification in Flexible Compensation, (CFC) by the Employers Council on Flexible Compensation,

 ♦  a 218 Life and Health Insurance license offering Section 125 plans since 1989,

 ♦  a Third Party Administrator’s (TPA) license administering ERISA self-funded health and welfare plans,

 ♦  Professional Employer Organization (PEO) license with co-employer responsibility for 500 work site employees, and,

 ♦  PEO Controlling Person’s license.

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