When the 21st Century Cures Act was signed into law on December 13, 2016 (with an effective date of January 1, 2017), which included the language from the Small Business Healthcare Relief Act, the era of defined contribution health benefits for small businesses was ushered in.
By authorizing the creation of Qualified Small Employer Health Reimbursement Arrangements (HRA), the law (Title 18) allows companies to use tax-preferred dollars to reimburse employees who buy their own insurance. In other words, a business with fewer than 50 full-time employees can reimburse employees for purchasing individual health insurance and the employees won't have to pay taxes on the company's premium contribution (the company won't pay payroll taxes on the contribution either). In this way, the company can set a defined premium contribution amount that is used to reimburse employees that purchase their own ACA compliant health insurance on the individual market, instead of establishing and managing a traditional group health plan.
Of course there are some limitations in the law including: the company can't offer a group health plan, and it must make the reimbursement available on the same terms to all employees. The reimbursement amount is also limited to $4,950 for individual insurance and $10,000 for a family plan (indexed for inflation), and an employee can't receive a pre-tax reimbursement if they don't have individual insurance. But in general the new law will likely encourage small and mid-sized companies that currently offer group plans, or that have been considering offering a group plan, to replace those plans with reimbursed individual coverage. The benefits to the small business (and the employee) are just too great.
The small business owner gets to define a fixed premium contribution and receive a tax deduction for the business, and he or she no longer has to deal with annual enrollment, COBRA, HIPPA, renewal increases, and employee complaints about the plans offered. The employee, on the other hand, still receives tax-free premium assistance from the company and can pick any plan that fits their needs, and they can take that plan with them if they leave their employer. Many small business owners have been looking for something different in the ACA era, and the Small Employer HRA is an exciting new option that will become available in 2017.
In response to the 21st Century Cures Act becoming law, Digital Health Innovations is excited to announce the launch of the HealthJibe Mobile Health Empowerment Arrangement, the first specialty health benefit that combines the power of a qualified small employer health reimbursement arrangement with consumer health engagement technology, and delivers it all through a simple to use mobile app.
Not only does the HealthJibe app manage the small employer HRA, it makes health engagement the foundation of the company's health benefit in order to stabilize premium costs over the long term, not to mention provide additional benefits including: lower LTD/STD premiums, lower absenteeism/presenteeism, and higher productivity.
Using the HealthJibe app is simple. Employees simply download the app to their Android or iOS device and activate it. Then they accumulate points with the app by monitoring lifestyle habits, staying on top of preventive screenings and exams, and developing awareness about their emerging health risks. The points they accumulate help them earn larger premium reimbursement allowances, and they use the app to submit and track their reimbursement requests.
The HealthJibe Mobile HEA is a modern solution for consumer-directed, small business health benefits that takes full advantage of the new law providing for small employer HRAs. HealthJibe will empower employees to take control of their health and well-being while stabilizing health care costs for both the business and the employee.
To learn more about the small employer HRA and the HealthJibe Mobile HEA, register for an upcoming webinar sponsored by Digital Health Innovations. (REGISTER HERE).