Is there a penalty for companies under 100 who offer HRAs?

The critical number is 50 not 100, but, yes, there may soon be a penalty. Small employers who offer a Health Reimbursement Arrangement (HRA) without an associated health insurance plan face penalties of up to $100 per day per employee starting in 2016. Under the Affordable Care Act, employers who have 50 or more full-time […]

2018 HSA contribution limit

The critical number is 50 not 100, but, yes, there may soon be a penalty. Small employers who offer a Health Reimbursement Arrangement (HRA) without an associated health insurance plan face penalties of up to $100 per day per employee starting in 2016.

Under the Affordable Care Act, employers who have 50 or more full-time employees must:

  • Provide minimum essential coverage to most of those employees
  • Pay the penalty, called the Employer Shared Responsibility Payment.

HRAs don’t meet the definition of minimum essential coverage, no matter their benefits. Smaller employers can continue offering HRAs as a way of delivering health coverage at an affordable cost, but now they must do so in connection with an Affordable Care Act compliant health insurance plan.

The magic number of 100 employees refers to the transitional arrangements that will gradually phase in the employer’s penalty. Under these rules, the Employer Share Responsibility provision will apply to businesses with 100 or more full-time employees from 2015 and employers with 50 to 100 full-time employees starting in 2016. For any small business caught unaware, time is running short to get their house in order.

Helpful links:

Pasha Law: Temporary Relief from ACA Penalty for Small Businesses – A description of the ACA’s small business penalties.

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