Employers now can't use health reimbursement accounts to help workers buy insurance on a tax-favored basis

McAfee & Taft attorney Brandon Long discusses one side effect of the Affordable Care Act in which employers no longer can use health reimbursement accounts to help their employees buy individual insurance policies on a tax-favored basis.
by Paula Burkes Modified: October 9, 2013 at 8:00 pm •  Published: October 8, 2013
Advertisement
;

Q&A with Brandon Long

Reform prohibits use of health

reimbursement arrangement

Q: What is a health reimbursement arrangement (HRA)?

A: An HRA is an arrangement offered by some employers to reimburse employees for medical expenses incurred by the employee, the employee's spouse, and the employee's dependents (and certain others), up to a maximum dollar amount. Usually the employer credits an employee with a dollar amount under the employee's HRA account and then reimburses the employee for medical expenses up to the credited amount. Employers have been using HRAs for some time because they provide certain flexibility that other arrangements do not. Amounts reimbursed through an HRA are excludable from the employee's income.

Q: How have small employers used HRAs in the past?

A: HRAs can be structured in different ways. Some small employers who can't afford to provide a group health plan for their employees have historically used HRAs to help employees buy individual insurance policies. For example, some small employers have used HRAs to pay the employee's premiums — for an individual insurance policy — directly to the insurance company, on a tax-free basis to the employee. This has been a very nice tax benefit to employees of small employers.

| |

by Paula Burkes
Reporter
A 1981 journalism graduate of Oklahoma State University, Paula Burkes has more than 30 years experience writing and editing award-winning material for newspapers and healthcare, educational and telecommunications institutions in Tulsa, Oklahoma...
+ show more

Advertisement


Trending Now



AROUND THE WEB

  1. 1
    Antonin Scalia faults Sonia Sotomayor for 'doubly shameful' suggestion that Michigan voters are...
  2. 2
    The NRA Quietly Backs Down On Domestic Violence
  3. 3
    Tara Lipinski, Johnny Weir to work Kentucky Derby
  4. 4
    Oklahoma basketball: Juco guard set to visit Sooners on Wednesday
  5. 5
    Texas town ready to drink its own toilet water
+ show more