Labor and Employment Alert: 21st Century Cures Act

On December 13, 2016, President Obama signed the 21st Century Cures Act (H.R. 34) into law. The 21st Century Cures Act contains two provisions that relate to group health coverage.

Healthcare Reimbursement

The Act suspends the application of the excise tax through December 31, 2016 and adds a new permissible form of standalone HRA, the qualified small employer health reimbursement arrangement (QSEHRA). Beginning January 1, 2017, a small employer will be able to establish a QSEHRA that can be used by its employees to pay for medical care expenses, including paying premiums for individual health insurance policies.

The Act amends the definition of “group health plan” under ERISA to exclude QSEHRAs. This revision means that QSEHRAs are not subject to COBRA or ACA group health plan provisions (other than the Cadillac excise tax which will apply in 2020 unless further delayed or repealed).

Mental Health Parity

The 21st Century Cures Act tasks the HHS, DOL and Treasury with coming up with additional guidance on compliance with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The guidance is supposed to help health plans, patients and health care providers identify compliant and non-compliant plan designs with a particular focus on determining parity in non-quantitative treatment limitations such as standards for medical necessity, preauthorization, provider reimbursement rates, fail first therapy and step therapy. The guidance will include “clarifying information and illustrative examples” of how a health plan should provide individuals and their representatives access to plan information to verify a plan’s compliance with the MHPAEA.

For additional information on the 21st Century Cures Act please visit