Health Reimbursement Arrangements (HRAs)

Health Reimbursement Arrangements (HRAs) are account based plans that many small businesses use to help their workers pay premiums or fill in cost sharing obligations. In 2014, the IRS defined HRAs as group health plans, meaning these accounts have to meet insurance rules. Because HRAs are not insurance products, employers offering them are in violation of the ACA’s market rules, and can be fined $100 per day per employee. This fine – up to $500,000 per employer – is 18 times more than the fine for large employers who drop coverage.

Small businesses offering HRAs are trying to help their workers, but the IRS says their effort violates ACA requirements.

CAHC helped develop the Small Business Healthcare Relief Act (H.R. 5447/S. 3060). This critical legislation will allow small businesses with less than 50 employees to provide HRAs to help their workers and their families pay for health insurance premiums and other medical expenses without facing outrageous fines. 

The bill text was incorporated into the 21st Century Cures Act (P.L. 114-255), which President Obama signed into law at the end of 2016.


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  • P.L. 114-255: 21st Century Cures Act; HRA provision- SEC. 18001