21st Century Cures Act Signed By President Obama

John Dundon

President Obama signed the 21st Century Cures Act into law creating an option for small businesses to offer employees a health reimbursement arrangement (HRA) that is funded by the employer.

Beginning January 1, 2017, the maximum employees can receive per year through the HRA is $4,950 for individuals who show they have individual coverage or up to $10,000 for workers who also have coverage for family members. The contribution cap will be indexed for inflation.

This arrangement is available to employers who are not applicable large employers (ALEs) subject to the employer mandate and do not offer group health plans to its employees. Employees who participate in this small business HRA may lose, or face a reduction, in their eligible subsidy from the marketplace to purchase insurance.

Enrolled with the United States Treasury Department to practice before the IRS, governed by rules stipulated in United States Treasury Circular 230. As a Federally Authorized Tax Practitioner and a tax appeals specialist my Enrolled Agent License #85353 is issued by the United States Treasury. With this license I work for U.S. taxpayers everywhere to resolve tax matters and de-escalate stress about taxes or tax disputes for individuals and corporations with federal and state issues.

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2 comments on “21st Century Cures Act Signed By President Obama

  • These new SBHRA (small business health care accounts) require an employee notice and most likely a plan document so there may be some paperwork to getting them started. I’m not clear on how this impacts the S corp owners health insurance benefits when they are in personal name as well. Question 2 of notice 2015-17 gave guidance on this issue but was before SBHRA’s were allowed.

    • John R. Dundon II, EA

      Hello Randy,

      GrEAt question. You are certainly not alone in your confusion or concern. It appears further guidance from the IRS is in order. According to the IRB, “unless and until additional guidance provides otherwise, taxpayers may continue to rely on Notice 2008–1 with regard to the tax treatment of arrangements described therein for all federal income and employment tax purposes. To the extent that a 2-percent shareholder is allowed both the deduction under Code § 162(l) and the premium tax credit under Code § 36B, Revenue Procedure 2014–41, 2014–33 I.R.B. 364, provides guidance on computing the deduction and the credit with respect to the 2-percent shareholder.” Hope this helps!

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