Thursday, December 29, 2016
Small Business Will Save Thousands With The New 21st Century Cures Act
HRAs vs HSAs
The excise tax repeal is part of a much larger 21st Century Cures Act which includes other initiatives such as improving FDA regulatory processes, providing funding for the National Institutes of Health, and taking steps to reduce the opioid epidemic. At the very end of the bill, buried deep in section 18001, is important information that will affect all small businesses with fewer than 50 employees.
The bill will allow employers to give more money to employees through HRAs, health reimbursement arrangements, which are used to reimburse employees for the cost of health insurance premiums. HRA accounts are owned and controlled by employers who usually allow the funds to accumulate from year to year. When employees leave, they forfeit any remaining balanced. But HRAs help employees with health care costs.
This is different than HSAs, or health savings accounts, which are owned by the employees and can be funded by both employees, employers or both.
Makes small business more competitive
The excise tax was a penalty on small employers which had previously reimbursed employees’ medical expenses or premiums using HRAs. The 21st Century Cures Act has now done away with this excise tax, allowing small businesses to offer more options to employees. Although the initial tax abolishment is an immediate benefit, doing away with the excise tax will allow small businesses to also be more competitive in recruiting potential employees by offering a better menu of benefits.
Read more at www.forbes.com/sites/theapothecary/2016/12/29/obamacare-repeal-has-begun-for-small-firms/#7937b71d6a65