Employers offering Health Reimbursement Arrangements to their employees currently do not have to give employees written notice 90 days before the beginning of the year when the HRA will be provided.
The IRS recently suspended the small employer deadline to provide HRA notice to their employees until further notice.
Providing qualified small employers – those with fewer than 50 full-time employees or full-time equivalent employees – the option to provide standalone health reimbursement plans apart from a health insurance plan was part of the 21st Century Cures Act signed into law in December 2016 by President Barack Obama.
HRAs are a way for small employers who cannot afford to provide a group benefit plan to help offset medical expenses incurred by their employees. Under these arrangements, an employer agrees to reimburse medical expenses, including health insurance premiums, up to a certain amount per year. The reimbursement for medical expenses is not included in the employee’s taxable income.
HRAs won’t be treated as a group health plan. Thus, a qualified small employer HRA isn’t subject to the tax law’s group health plan requirements, including the portability, access, and renewability requirements of the Affordable Care Act (ACA, also known as Obamacare). HRAs are arrangements under which an employer agrees to reimburse medical expenses including health insurance premiums up to a certain amount per year, with unused amounts available to reimburse medical expenses in future years. The reimbursement is excludable from the employee’s income.
In order to offer an HRA, employers are required to make a number of disclosures to employees – including providing written notice at least 90 days prior to the beginning of the year when the plan will be provided. Now, however, this particular requirement has been temporarily lifted for plans beginning in 2017.
To read more about HRAs and some of the requirements qualified small employers must adhere to, please see our article published here.