A small business HRA is a type of health savings account that can benefit employers and employees. It has been making small business news more and more due to recent questions surrounding the topic of healthcare in America. Thus, many business owners have been left in the dark about these types of HRA options. That could be detrimental to the health of your employees and the success of your business. If you are a small business owner, find out all about these healthcare options in this small business HRA guide to make the best decision regarding your small business healthcare programs.
What Is A Small Business HRA?
What are small business HRAs anyway? HRA stands for health reimbursement arrangements. These small business HRAs allow small businesses to repay employees who buy their own health insurance plans from the open market. The bill that made this possible was passed back in 2016. It also included some features that were particularly beneficial for employers with fewer than 50 full time employers. Of course, HRAs became very popular among small business owners because of these reasons. That is why you need to recognize what small business HRAs are to consider whether or not you will utilize the program at your own business.
What Are QSEHRAs?
QSEHRAs are another name given to small business health reimbursement arrangements. The acronym stands for qualified small employer health reimbursement arrangement. A QSEHRA is the exact same thing as a small business HRA , just given another name. These types of arrangements can be offered by those small businesses with fewer than 50 employees. Those small businesses must not have a group health plan offered to employees in order to qualify for these arrangements. When researching qualified small employer health reimbursement arrangements, remember that the two terms may be used interchangeably. It will help make it easier to understand your findings.
Small Employer HRA Requirements
Small business HRA requires employers to complete certain tasks in order to qualify for the program. Those businesses that utilize these government programs must inform employees up to 90 days before the start of the year they plan to enact the plan. In these notices, they must include information regarding QSEHRA benefit amounts. They must also inform employees regarding their responsibilities. This includes notifying the appropriate parties if they plan to apply for a subsidy as well as informing them of the consequences they may face if they choose not to obtain the minimum essential coverage set forth by the Affordable Care Act, or ACA. As a small employer, these small business HRA requirements need to be thoroughly understood and fulfilled should you choose to take advantage of a QSEHRA.
What Employees Are Eligible?
It is also important to note that employees must also meet certain requirements in order to take advantage of an HRA. These employees must be at least age 25 and over. In addition, they must be full-time employees at your business. Full-time employees aged 25 and up must have been employed at your organization for at least a minimum of 90 days in order to qualify. Ultimately, to receive HRA coverage, they must also present proof of coverage before benefits disbursement. Employers must know what eligibility requirements their workers must meet when considering applying for HRA subsidies for their individual health insurance plan. Otherwise, how will you guide your employees through the process? Keep this in mind as you learn about your potential small business HRA.
QSE HRA Limitations
Of course, there are limits to employer contributions for employee healthcare expenses. Employers can contribute no more than $4,950 to an individual employee. For those employees with family member expenses as well, the limit is doubled. Family expenses cap at $10,000. Employers can of course choose to pay less than these amounts annually for employees. But for those generous small business owners, it is good to understand the limits that you may be required to confine to. Be aware that HRA employer contributions limits could rise. They are subject to inflation, so they could change from year to year. This could also impact your financial business plan, which is why you need to be aware of it. Small business owners must be aware of the limits regarding QSE HRAs, otherwise they may wind up spending money that will not be reimbursed.
Small business healthcare plans are costly. That is why many small business owners who employ less than fifty employees do not offer group health insurance policies. Now, these small employers can still offer employees some type of assistance should they choose to purchase an individual health insurance policy on their own. Learn all about the small business HRA program above, so that you can inform whichever payroll companies you use that you will be participating in the program. This QSEHRA guide for employers will give you all the information you need to know to start considering this program for your employees and the organization. Be sure to conduct further research before you launch your new employee reimbursement plan. That way, you can ensure all parties are benefited from the government program.