A range of new federal regulations open the door for resurgence of small business Health Reimbursement Arrangements (HRAs) for 2020. These low cost, high efficiency health plans have been mostly dormant since the passage of the Affordable Care Act. The new plans offer the potential of lower costs, lower taxes and increased employee satisfaction. But they also bring legal risks and privacy concerns for the employees of small businesses.
HRAs vary from one employer to the next and are highly customizable. That makes it difficult to make blanket statements about their effectiveness in all small business situations. It is best to consider the options and benefits on a case by case basis. Freedom Benefits founder Tony Novak CPA explains more in this short video:
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Three major changes in federal law are rocking the boat on small business health plans. This blog posts summarizes the three most significant changes this past year.
CHANGE #1: No more individual mandate penalty in most states.
WHAT IT MEANS: Without a steep tax penalty for not having a specific type of health insurance, some people are free to consider a wider range of options. Some of these options will save money and expand choices.
WHAT FREEDOM BENEFITS IS DOING: Our financial planning conversations with clients include a wider range of options.
CHANGE #2: Expansion of short term health insurance.
WHAT IT MEANS: This adds a simple, fast, cheap coverage option for healthy people who are in life transitions.
WHAT FREEDOM BENEFITS IS DOING: Building relationships with insurance companies that offer these short term medical insurance products, reviewing specific products, expanding online enrollment
CHANGE #3: Health Reimbursement Arrangements may pay for individual insurance.
WHAT IT MEANS: Small employers are no longer persuaded to offer a group health plan. The same advantages or more
WHAT FREEDOM BENEFITS IS DOING: Emphasizing the HRA’s ability to control health costs for the employer, the ability to increase choice and value to the employee and a new tax advantage. For 2020 employee benefit plans, we include an HRA option at no additional cost in all small business benefit plans and all small business clients where we handle payroll processing.
New cost saving options for some small business health plans.
Qualifying small business employers can now customize their benefits and save money in the process.
Effective immediately, the Trump administration will allow religious groups, nonprofits, some small businesses and some other employers to opt out of an Obamacare requirement to provide birth-control coverage for their employees. Exempt employers include “religious employers”, houses of worship, health sharing ministries, a few employers who got religious exemptions, non-profit hospitals, some institutions of higher education. This is the first time since 2011 that employers were allowed this option. Two separate rules issued by the Departments of Health and Human Services, Labor, and Treasury finalized exemptions for employers that have religious or moral objections to contraceptive coverage. One HHS rule called the “Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act” allows employers to claim “sincerely held” religious objects while a second HHS rule called the “Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act” offers another exemption on moral grounds.
The Supreme Court ruled in 2014 in the Hobby Lobby case that the Affordable Care Act couldn’t require employers to offer insurance coverage for certain birth control methods they equate with abortion. The court decision applied only to private corporations such as the family-owned companies that challenged the law. Women working for those companies could still get morning-after pills and IUDs from other sources, such as the government or private insurance plans.
Freedom Benefits can help small business employers modify their employee health plans to exclude this expense and save money through insurance or a health reimbursement arrangement. Likewise, we can steer employees who need this coverage to alternate sources.