CAHC Supports US Treasury Announcement that Delays Standalone HRA fines for Small Employers

Originally posted February 18, 2015 by The Council for Affordable Health Coverage (CAHC).

Today the U.S. Treasury Department announced that it will delay, until July 1, 2015, the enforcement of a fine against employers with fewer than 50 employees who use standalone health reimbursement arrangements (HRAs) to provide assistance to their workers in affording health costs. The fine – $100 per day per employee — would apply to all businesses and their workers and would effectively end stand-alone HRAs, an important tool used by at least 10.8 million people to help afford health costs.  The delay means the accounts can continue to be used by those businesses with fewer than 50 employees.

Joel White, President of the Council for Affordable Health Coverage made the following statement in response to the announcement:

“We support the delay of the fine against these employers because it means workers and their families can continue to receive support for their health care costs.  HRAs have been used by employers for decades as alternative vehicle that allows employers to provide real benefits to workers. The short term relief announced by Treasury today means Congress has a very short window to enact legislation to permanently fix this problem created by the Affordable Care Act. Fortunately, bipartisan legislation was introduced late last year, which will be reintroduced shortly. We look forward to working with the House and Senate Champions – Congressmen Boustany and Thompson and Senator Grassley  – to fix this very serious problem.”

According to research firm Ate Group, there are an estimated 10.8 million HRA accounts in 2015. This represents about 9 percent of covered workers across all firm sizes, according to a 2013 survey by the Kaiser Family Foundation[i].  Firms contributed $947 annually on average for individuals and $1,800 annually on average for families in 2013. We know many employers (about 50% according to benefits consulting firm Towers Watson) are looking to HRAs and other account based plans as a strategy to provide assistance to workers over the next 2 to 5 years.

While this ruling delays the enforcement of the penalties there is no guarantee the use of individual HRA’s will be allowed by this administration. It would be prudent for companies that are currently utilizing Individual HRA’s to fund individual health insurance start looking for alternatives. Those alternatives may range from implementing group plans and dropping use of individual health insurance and HRA’s as a way of providing this benefit to their employees. Keystone’s Plan Smart may be an alternative as a means of providing affordable health benefits to small employee groups. If you would like to learn more about Plan Smart as an alternatives please contact us at

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