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Small employers now allowed to reimburse individual health insurance premiums

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Effective January 1, 2017, small employers will be allowed to reimburse employees for individual health insurance premiums without the threat of a $100 per day penalty under the Affordable Care Act thanks to the 21st Century Cures Act signed on December 13 by President Obama. While the main thrust of this act is to fund the MoonShot Cancer project and other medical initiatives, the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) portion allows small employers more flexibility with their health insurance options.

There are some parameters to this arrangement such as:

  • The employer must have fewer than 50 fulltime equivalent employees, and the employer must not also provide group health coverage to its employees.
  • The employer must not discriminate and must provide the coverage on the same terms to all eligible employees.
  • The employer must fund the program. No salary reduction arrangements may be made under a QSEHRA.
  • Reimbursements made by the employer may not exceed $4,950 for employee, or $10,000 for family coverage, per year (adjusted annually).
  • Employees must show their employer proof of minimum essential coverage to qualify.

Contact your HKP or HK account manager to learn more about this new regulation and how you can set this up for your employees.