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Health Reimbursement Arrangements

Starting in 2014, employers are no longer able to reimburse employees "pre-tax" for health insurance if it is not a group plan.

If you have employees that submit their health insurance bill to you and you treat it as a "pre-tax" item, this will no longer be allowed under the new health care laws. You can still give them the money but it must be reported as taxable wages starting January 1, 2014.

Employers that are considering providing employees a tax-free pool of funds to use for the purchase of individual health insurance policies in the Health Insurance Marketplace will not be able to do so as it has been prohibited by the latest guidance under the Affordable Care Act.

Providing tax-free funds for premium reimbursement will only be allowed if the funds are used for "excepted benefits" such as a limited dental or vision plans designed to have a value under $500 annually. The other exemption to the guidance prohibiting HRA's is if the HRA is integrated with a group health plan.

If you are thinking of providing a HRA please carefully consider the strict regulations and consult your business advisors to make sure you are in compliance.

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