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New Law Eases Small Business Healthcare Burden

President Barack Obama signed an omnibus health bill on Dec. 13 called the 21st Century Cures Act. In addition to provisions on medical research, streamlined regulations for new drugs and medical devices, and improvements to mental health and substance abuse care, the new law allows companies to use health reimbursement arrangements to compensate employees who purchase their own insurance...
December 20, 2016

21 Century Cures

President Barack Obama signed an omnibus health bill on Dec. 13 called the 21st Century Cures Act. In addition to provisions on medical research, streamlined regulations for new drugs and medical devices, and improvements to mental health and substance abuse care, the new law allows companies to use health reimbursement arrangements to compensate employees who purchase their own insurance.

Starting on Jan. 1, 2017, a company with fewer than 50 full-time employees can reimburse employees for purchasing individual health insurance as if it were directly paying the premiums on a group health policy. Employees would not have to pay taxes on the company’s premium contribution, and the company also would not owe payroll taxes on it. The law limits reimbursement to $4,950 for individual insurance and $10,000 for a family plan, amounts that are indexed for inflation. See this article in Forbes for additional details.