The 21st Century Cures Act: What it means for employers

Before leaving office, former President Barack Obama signed the 21st Century Cures Act into law. This legislation was supported by small businesses looking for health care alternatives for their employees, according to the Society for Human Resource Management. Secova has a closer look:

A new type of HRA
In the past, the Internal Revenue Service and U.S. Department of Labor had strict guidelines on whether companies without employer-provided coverage could use health reimbursement arrangements to support workers who purchased health insurance on the open market. Even those with fewer than 50 employees that were therefore not required to provide a group health plan under the Affordable Care Act were restricted from funding people's other coverage options.

The 21st Century Cures Act overturned that regulation and now enables small businesses to reimburse people who use HRAs to pay for qualified out-of-pocket medical expenses and for non-group health insurance premiums, according to the legislation. The law creates a new type of HRA, the Qualified Small Employer Health Reimbursement Arrangement, or QSEHRA​, and specifies the following:

  • Through employee QSEHRAs, the maximum reimbursement is limited to $4,950 for single coverage and $10,000 for family insurance. This will be adjusted on a yearly basis for inflation.
  • Small employers that offer this option must do so for all full-time employees, except those who are under 25 years old, haven't completed 90 days of service or are covered by a collective bargaining agreement for accident and health benefits.
  • An employer must make the same QSEHRA contributions for all eligible employees, generally. Amounts may differ based on the cost of the insurance policy, however, which could alter the aforementioned rule.

Applicable large employers – those with 50 or more full-time equivalent workers – are not included in this legislative change. Instead, these organizations must continue to comply with the ACA's requirement to provide coverage for employees. The future of the ACA is unknown, as the Trump administration has promised to repeal and replace the law at some point in the near future.

"The 'Cancer Moonshot' initiative, put in place by Joe Biden, will receive funding."

Additional funds support other causes
The 21st Century Cures Act encompasses more than just updated HRA guidelines. It also increases funding for medical research and streamlines the approval process for pharmaceutical drugs.

The bill reserves $4.8 billion for the National Institutes of Health, $1.8 billion of which is reserved for the "Cancer Moonshot" created by former Vice President Joe Biden to expedite research in that field. In addition, $1.6 billion was set aside for brain diseases including Alzheimer's, $500 million for the Food and Drug Administration and $1 million in grants to help states tend to opioid abuse, according to the Washington Post.

President Obama praised the bill as it brought Congress Democrats and Republicans together for a common cause.

"The bipartisan passage of the 21st Century Cures Act is an example of the progress we can make when people from both parties work together to improve the health of our families, friends and neighbors," Obama said.