Small Business Healthcare Exemption Moves On To Senate

The Small Business Health Care Relief Act of 2016 (H.R.5447) was proposed by Congressman Charles Boustany (R-LA-3) to expand employer healthcare options for small businesses. Cosponsored by 22 Democrats and 37 Republicans, the legislation recently passed the House and was referred to the Senate Calendar as General Order 526.

The legislation deals with Health Reimbursement Accounts (HRAs), which are tax exempt accounts which employers set up for their employees to cover insurance premiums, co-pays, and the costs of purchasing health insurance. These types of health care coverage have pros and cons. Supporters argue that employees recieve more freedom from these programs, since they can choose where to spend the money from these accounts. On the other hand, these programs still have annual limits, and since the funds are technically under the employer's control, opponents argue that HRAs are insufficient without an additional group health care plan.        

As the law currently stands, employers that want to offer HRAs have two options. They can either remove the annual limits on the accounts, or they can integrate their plan with a group health care plan. HRAs for retirees and companies with only one employee are still allowed under the Affordable Care Act (ACA), but bar those exceptions, companies are currently fined $100 per employee per day for not complying.

If the legislation is passed into law, businesses with less than 50 employees would be able to set up these accounts without an additional group health plan so long as the terms of the HRAs are the same for all employees. The bill would also allow the funds from these HRAs to be used to purchase coverage on the ACA’s public marketplace.

According to the Small Business Administration, between 17 percent and 33 percent of Americans are currently employed by firms with less than 50 employees. Additionally, according to the National Federation of Independent Businesses, one in six businesses without group health care plans utilize HRAs and only 41 percent of small businesses are currently able to provide group health care programs. The bill’s proponents believe that the increased flexibility offered by this bill allow more small employers to provide their workers with affordable healthcare.

Since its introduction, the bill has received support from a variety of major business organizations, including the U.S. Chamber of CommerceNational Federation of Independent BusinessCouncil of Affordable Health Coverage and a joint letter of support signed by 61 organizations. The bill was also sent to the Congressional Budget Office, which found it would have no net effect on the federal budget.  It is currently awaiting a vote in the Senate.