They are sorta like the former HRAs, with a couple of twists.
So what are these things?
They will be available to employers with fewer than 50 full-time-equivalent employees.
All employees with more than three years of service must be eligible to participate.
Employees employed less than 90 days, are under age 25, are part-time or seasonal can be excluded.
Must be funded 100% by the employer.
Salary reductions are not permitted.
There are dollar limitations ($4,950 if employee-only, $10,000 if family/dependent).
· The HRA is tax-free as long as the employee has health insurance.
· The HRA is taxable if the employee does not have health insurance.
COMMENT: I suppose an employer will require proof of insurance/non-insurance before writing the first check. This will tell them whether the HRA reimbursement will be taxable to the employee.
· If the employee is on an Exchange, any subsidy will be reduced by the amount reimbursable under the HRA. This is an indirect way of saying that a purpose of the new HRA is to allow small employers to reimburse employees for individual insurance premiums. Prior to 2017, this act was prohibited under ObamaCare.
Hey, progress. Back to the way it used to be.