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Title 18 of the new law, originally a separate bill called the Small Business Healthcare Relief Act, allows companies to use Health Reimbursement Arrangements to compensate employees who buy their own insurance.

Beginning on January 1st, a company with fewer than the equivalent of 50 full-time employees — that is, a business not subject to the Affordable Care Act’s employer mandate to offer insurance coverage to employees — can reimburse employees’ for purchasing individual health insurance as if it were directly paying the premiums on a group health policy: the employee won’t have to pay taxes on the company’s premium contribution, and the company won’t owe payroll taxes on it, either. The law sets some conditions for this new benefit: the company cannot offer a separate group health plan, and it must make the reimbursement available on the same terms to all employees, although it can vary the amount the reimbursement based on the employee’s age and family size, two main factors under the Affordable Care Act that insurers can use to determine the cost of plans. The law limits reimbursement to $4,950 for individual insurance, and $10,000 for a family plan, amounts that are indexed for inflation.

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