Included in the 21st Century Cures Act, is Section 18001, creating a new hybrid HRA entity called a Qualified Small Employer Health Reimbursement Arrangement (QSE HRA). This new form of HRA is designed to specifically allow non-ALE entities to resume paying for individual health insurance premiums for their employees. But the dance moves required to implement and use this new approach will create hazards for the employer or agent who doesn’t carefully follow the rules.
Who can implement a QSE HRA? Only an employer who does not meet the definition of an applicable large employer under the ACA, and who does not offer coverage to its employees. In other words, the employer (including other employers who fall under common control or ownership) who averaged less than 50 FTEs during 2016 (or the entire prior calendar year). This definition, reinforcing the ACA’s definitions and the calculations involved with determining large employer status, is preserved by the new legislation. Further, if they offer a group health plan to some of their employees (including management only), the employer is prohibited from adopting a QSE HRA unless they terminate their group health plan before the QSE HRA goes into effect.
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