December 14, 2016

21st Century Cures Act Expands Use of HRAs for Small Employers and Addresses Medicare Advantage Open Enrollment

Recently, President Obama signed the 21st Century Cures Act into law. The Cures Act contains provisions that impact Medicare Advantage Plans Open Enrollment and the use of Health Reimbursement Arrangements (HRAs) for small employers (employers with fewer than 50 full time employees).

Section 17005 of the legislation addresses a needed change to restore Open Enrollment for Medicare Advantage Plans. The 21st Century Cures Act provides for Medicare-eligible beneficiaries to make a one-time change during the first three months of any year to another Medicare Advantage plan, elect original Medicare fee-for-service program, or to elect coverage under Part D. This provision will be effective beginning in 2019.

“Qualified Small Employer Health Reimbursement Arrangements” (QSEHRAs), Section 18001 of the Cures Act, allows small employers to offer Health Reimbursement Arrangements (“HRAs”) on a standalone basis to employees, effective January 1, 2017. Employees may use funds in qualifying HRAs to buy individual health insurance, either on or off the exchanges/marketplace.  

Requirements on “Qualifying HRAs” (QSEHRAs) include:
  • Must be funded solely by employer contributions
  • Must not offer a group health plan
  • Must be offered to all eligible employees on the same terms
  • Maximum annual employer contribution is $4,950 per year for HRA coverage of an employee, and $10,000 for an HRA covering the employee + family.
  • Must provide payment or reimbursement for medical care expenses, which include premiums for non-group health insurance.  
This sprawling health bill is expected to cost in excess $3.5 billion over 10 years and also provides funding to fight against the opioid epidemic, invests in the President’s signature BRAIN research initiative to tackle such diseases like Alzheimer’s, provides resources for faster approval process for new medications and medical devices, and funds the Vice President’s “Cancer Moonshot” initiative. 

If you have any questions about this Alert, contact us or reach out to your Sentinel Benefits Account Manager directly.