Small business HRAs (QSEHRAs) are gaining momentum across the U.S. thanks to the passage of the Small Business Healthcare Relief Act - a provision of the 21st Century Cures Act. This piece of legislation enables small businesses to participate in HRAs designed specifically for them. Small business HRAs are a lifeline to companies struggling to attract and retain qualified employees while competing with the bigger guys offering health benefits. More than ¾ of job seekers say health benefits are very important to them, and 69% of employees said they would choose a position with health benefits over a higher salary.
While there are many factors to consider before setting up an HRA, one important question remains: which employees will you offer the HRA to?
To remain compliant, the HRA must be made available in a fair manner to your employees. All employees are eligible to participate in the HRA. You have the option to vary rates based on employee status (full-time vs part-time), employee age, or family status (single, couple, or family). As long as everyone that fits the criteria you set is treated fairly, you're good to go.
It is okay to just set up an HRA for full-time employees under this new law. Part-time, contractors, and seasonal workers can be excluded or reimbursed at a different rate.
There is no minimum contribution a company can make, but the annual contributions are maxed at $4950 for a single employee and $10,000 for an employee with a family.
Where to start
Setting up an HRA can be confusing, and that’s why it pays to find an advisor you trust. The experts at Take Command will help you come up with an efficient HRA design that is compliant with all the rules. Once your HRA is established, our advisors will help your employees choose a plan that fits their needs.
I wrote this blog because I love helping people decode confusing insurance jargon and understand the fine print. I'm a licensed health insurance professional and specialize in simplifying health insurance for individuals and small businesses. My QSEHRA articles have been featured regularly on Accounting Today, Accounting Web, HRWeb, and other industry publications. I'm also a member of Take Command Health's client success team and a full-time mom. Learn more about me and connect with me on our about us page. Thanks!