LSL CPAs wants to begin to explain the impact of the Affordable Care Act and the Health Care and Education Reconciliation Act of 2014 on your business. Both acts have a significant impact on Health Reimbursement Arrangements (HRA’s), Employee Payment Plans (EPP’s), and Health Flexible Spending Arrangements. Although this examination does not provide all of the details, it will give you an understanding of the challenges.
Challenge Of The Affordable Care Act To Employers
Before getting into the details, here is a basic summary of how the Affordable Care Act impacts Health Reimbursement Arrangements and Employee Payment Plans. The ACA has made it much more difficult for employers to offer these plans.
In order for an employer to offer such a plan, they must take several steps, including:
- Offer group coverage other than the HRA or EPP
- Offer the HRA only to employees who are covered by non-HRA/EPP group coverage.
Prior to The Affordable Care Act, employers were permitted to reimburse employees on a pre-tax basis for their individual health plan rather than provide group coverage.
Impact of the Affordable Care Act On HRAs & EPPs
HRA’s and EPP’s qualify as group health plans under the Affordable Care Act and are subject to the group health plan rules. To be allowed, here are some of the guidelines that need to be followed:
- A group health plan may not establish an annual limit on the dollar amount of benefits for any individual, and
- A group health plan must provide certain preventative services without imposing any cost sharing requirements on the insured.
A Flexible Spending Account Under ACA
A flexible spending accounts (FSA) is still permitted as long as the benefits provided are excepted benefits and the employer provides other group health coverage. Employer contributions are limited to 100% of the employee contributions or $500 plus the employee contribution. To learn more about the regulations in regards to a flexible spending account, talk to a tax professional.
The tax team at LSL CPAs understands the challenge of dealing with the Affordable Care Act. However, we are here to offer our clients the support they need. To learn more about the impact of the Affordable Care Act on your business, please contact the tax team at LSL CPAs by calling at (714) 569-1000.
By John Huckabay, CPA
