IRS Ruling Overturned; Small Employers Can Now Offer Stand-Alone HRAs 

Dec. 13, 2016, President Obama signed the 21st Century Cures Act. This legislation re-establishes a health reimbursement arrangement for small Employers called the Qualified Small Employer Health Reimbursement Arrangement.

With the passing of this act, many small employers and their employees can now celebrate over the previous IRS ruling preventing stand-alone HRA plans. Starting January 1, 2017, small employers that do not offer group health insurance to their employees will have an ability to provide a tax-favored reimbursement to their employees. This new HRA would allow eligible small employers to offer a health reimbursement arrangement funded solely by the employer that would reimburse employees for qualified medical expenses including health insurance premiums.

Who Qualifies for a Small Employer HRA?

  • An employer with less than 50 full time employees and does not offer a group health plan to any employees.
  • Employers must have the applicable plan documents to legally offer this benefit.
  • The Small Employer HRA must be provided on the same terms to all eligible employees. However, the Cures Act allows benefits under the HRA to vary based on family-size to help with varying health insurance plan costs.
  • The maximum contributions are $4,950 for individuals and $10,000 families.
  • In most cases participants are ineligible for subsidies under an exchange during the months that they are covered by the employer’s HRA. In rare instanstances participants may still be eligible, and should consult thier tax professional.

Authored by: Connie Fox, GBA
Connie Fox, GBA is BASIC’s Senior HRA Manager. She has worked hand-in-hand with companies for over 17 years helping design robust HRA Plans to fit their unique needs and goals.

Request a Small Employer HRA Proposal

If you are an agent and you need a proposal for your client please use this link.

Small Employer HRA – 21st Century Cures Act Webinar
Tue, Jan 3, 2017 2:00 PM – 2:45 PM EST
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BASIC’s Small Employer HRA Features

With the regulatory complexity of the changing health care industry it is important to partner with a reputable company. BASIC has always been an industry pioneer and innovator of benefit and compliance problem solving services.

  • BASIC takes care of all plan documents, administration, and reimbursements.
  • We show you how to legally assist employees with the cost of their individual premium costs through defined contributions.
  • We offer a simple annual fee; with no additional setup fees.
  • Small Employer HRA participants are able to take advance of BASIC’s quick reimbursement turnaround.
  • We provide participants with an HRA summary explaining their plan. This summary also explains that participants are not eligible to receive subsidies for insurance purchased under an exchange for the months when they are covered by the employer’s HRA.