The 21st Century Cures Act is headed to President Obama’s desk and is expected to be signed into law effective January 1, 2017.
While the Act addresses a number of items, of particular significance to brokers is a provision that removes qualified small employer (fewer than 50 full-time employees) health reimbursement arrangements (HRAs) from the definition of a “group health plan.” Following IRS guidance in 2014 and 2015, brokers had been limited in their ability to assist employers who wished to reimburse employees for the purchase of individual health insurance.
Under the Act, qualified HRAs may be used to assist employees in purchasing coverage on the individual market. However, arrangements must meet a number of criteria to be considered a qualified reimbursement arrangement.
For example, annual benefits under qualified HRAs cannot exceed an indexed maximum of $4,950 per year ($10,000 if family members are covered), must be employer-funded, and can only be used for qualified medical expenses. Also, the HRA benefits must also be offered on the same terms to all “eligible employees.”
Employees covered under a qualified HRA will be ineligible for subsidies for policies purchased through the health insurance exchanges.
The Act also contains significant changes for Medicare Open Enrollment beginning in 2019. The Act provides that Medicare-eligible individuals may make a one-time change during the first three months of any year to another Medicare Advantage plan, elect original Medicare fee-for-service program, or to elect coverage under Part D.
The full text of the bill can be accessed here.
Cornerstone will continue to provide updates as provisions of this Act are implemented.
For more information, contact your Cornerstone representative.