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The Wagner Law Group

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established in 1996, The Wagner Law Group has 26 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.





Contact Info

The Wagner Law Group


  Integrity | Excellence



Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Palm Beach Gardens 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418



Tel: (813) 603-2959

Fax: (813) 603-2961

101 East Kennedy Boulevard

Suite 2140
Tampa, FL  33602 


San Francisco

Tel: (415) 625-0002

Fax: (415) 358-8300

300 Montgomery Street

Suite 600

San Francisco, CA 94104


St. Louis

Tel: (314) 236-0065

Fax: (314) 236-5743
100 South 4th Street, Suite 550
St. Louis, MO  63102 







December 15, 2016


 Health and Welfare Law Alert




    Small Employers May Resume Offering Premium Reimbursement HRAs to Employees






The recently enacted 21st Century Cures Act (the "Act") will allow small employers that do not offer any group health plan to their employees to resume offering "qualified small employer" Health Reimbursement Arrangements ("QSEHRAs") to employees that can be used to pay individual health insurance premiums.  The Act becomes effective January 1, 2017.



Background.  The Affordable Care Act ("ACA") prohibited employers from offering stand-alone HRAs because the arrangements did not comply with many of the ACA's market reforms, including the requirement to provide first-dollar coverage of preventive services and the prohibition on lifetime and annual limits.  Following the ACA's enactment, the IRS released guidance (IRS Notice 2013-54) that reiterated this prohibition and imposed an excise tax of up to $36,500 for failures to comply with this rule. 



New Law.  The Act provides that QSEHRAs will not be considered group health plans for ACA compliance purposes, which means the arrangements will be exempt from the market reforms that had caused their prohibition. Accordingly, certain small employers may resume offering their employees QSEHRAs, and employees may use funds in such arrangements to purchase individual health insurance. 



The following is a summary of certain requirements attendant to QSEHRAs:



General Requirements.  To qualify as a QSEHRA, the Act requires that the arrangement must:


  • be funded solely with employer contributions, which means employees cannot make salary reduction contributions under the arrangement.
  • be offered to all eligible employees on the same terms.  However, the employer can exclude employees with less than 90 days of service, certain part-time and seasonal employees, certain collectively bargained employees, and non-resident aliens.
  • limit annual employer contributions to $4,950 per year for employee-only coverage and $10,000 for family coverage.
  • provide payment or reimbursement for health care expenses incurred by the employee (or the employee's family member), including premiums for individual health insurance.


Employer Eligibility Requirements.  An employer is eligible to offer a QSEHRA if:


  • it is not an Applicable Large Employer under the ACA (i.e., an employer that had 50 or more full-time employees or full-time equivalent employees during the preceding calendar year); and
  • it does not offer group health coverage to any of its employees. 

Minimum Essential Coverage Requirement.  If an employee uses the QSEHRA funds to purchase health insurance that does not provide minimum essential coverage, the reimbursement amount will be included in the employee's gross income for tax purposes. 



Notice Requirements.  Employers that offer QSEHRAs must furnish a written notice to all eligible employees at least 90 days in advance of the beginning of the new plan year.  (For 2017 the due date is March 13, 2017, i.e., 90 days after the December 13, 2016 enactment date of the Act.)  The notice must explain:


  • the amount that will be the employee's benefit under the arrangement for the plan year;
  • that the employee should provide specified information to any Health Insurance Exchange to which the employee applies for an ACA premium tax credit; and
  • That if the employee is not covered by minimum essential coverage during the entire plan year: (i) the employee may be subject to the ACA's individual mandate penalty, and (ii) reimbursements under the QSEHRA may be included in income.





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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.