Health Reimbursement Arrangements…Not Allowed Any Longer!

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For some of you reading this it will be a simple reminder of the changes to Health Reimbursement Arrangements (HRAs). For others, this will be new information. In either instance, it is very important for you to pay close attention. If you are an employer who provides health care benefits to your employees via a reimbursement arrangement of just about any kind, you are no longer allowed to do so. This is because under the Health Care Reform Act these plans are considered group plans that fail the annual dollar limit prohibition put in place by this law. You should cease this practice immediately. The associate penalty is a very high $100 per day per employee. For example, if you have 15 employees your daily penalty would be $1,500.

HRAs have been in existence for decades and have served the small business owner and his/her employees well over that time. However, times are changing and you will need to change with them. You will now need to provide this benefit via a qualified employer sponsored health care plan or eliminate this benefit entirely (unless you are considered to be a large employer in which case you must provide this benefit). If you do choose to eliminate the benefit altogether, you may consider increasing the ordinary compensation of the effected employees to mitigate the negative impact on their personal finances. If you would like more information about adding a qualified plan, I can refer Blue Moon Benefits Group as a wonderful resource. They can be reached at (336) 778-1070 and I recommend asking to speak to Mike York.

If you have further questions please feel free to contact me or post your question to my blog.

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