HRA bills introduced in Congress


U.S. Senators Chuck Grassley (R-IA) and Heidi Heitkamp (D-ND) and Congressmen Charles W. Boustany, Jr., MD, (R-LA) and Mike Thompson (D-CA) have introduced bipartisan companion language in the House (H.R. 2911) and Senate (S. 1697) known as the Small Business Healthcare Relief Act to roll back existing Treasury Department guidance issued under the authority of the Patient Protection and Affordable Care Act prohibiting the use of health reimbursement arrangements (HRAs). Boustany and Thompson introduced the legislation last Congress.

On September 13, 2013, Treasury issued guidance disallowing employers from using stand-alone HRAs to reimburse employees for health care-related expenses, stating these arrangements did not satisfy the ACA’s minimum benefit and annual dollar cap requirements for health insurance plans offered by employers. As a result, employers that continue to offer HRAs would be subject to a $100 per day per employee penalty, totaling up to $36,500 over the course of the year. After Boustany questioned Secretary Jack Lew on this issue in a Ways & Means hearing on February 3, 2015, Treasury announced on February 18 that it would delay enforcement of this guidance and resulting penalties until July 1, 2015.

Grassley, Heitkamp, Boustany, and Thompson’s legislation restores flexibility and choice into the marketplace by:

• ensuring that small businesses and local municipalities with fewer than 50 employees are allowed to continue using pre-tax dollars to give employees a defined contribution for health care expenses;

• allowing employees to use HRA funds to purchase health coverage on the individual market, as well as for qualified out-of-pocket medical expenses if the employee has qualified health coverage; and

• protecting employers from being financially penalized for providing this cost-sharing option to employees.

Grassley said: “I’ve heard from farmers, small business owners and accountants who are worried about getting hit with a penalty for something they’ve done for a long time without any controversy. It doesn’t make sense to tell small employers they can’t help their employees get health insurance. Why disrupt something that worked? Our bill puts this provision back to what it was so farmers and small businesses can use this option as they see fit.” According to Heitkamp, “Our bipartisan bill would make a needed fix to restore the ability for small businesses, which sometimes can’t afford to provide health benefits for employees, to help their workers purchase coverage using HRAs. That just makes sense. I have long said some parts of the health care reform law work, but we need to improve the pieces that should work better for families and small businesses—and this bill continues those efforts.”

Added Tom Woods, Chairman of the National Association of Home Builders (NAHB) and a home builder from Blue Springs, MO, “This common-sense legislation is particularly important for small businesses with fewer than 50 employees. Even though these employers cannot offer a health insurance plan due to prohibitive costs, they would still be able to help make health care more affordable for their workers. We urge Congress to swiftly pass this bipartisan legislation so that more employers can help their workers meet the high cost of medical premiums or out-of-pocket expenses.”

Supporters of the legislation include the U.S. Chamber of Commerce, the National Association for Towns and Townships, the American Farm Bureau Federation (AFBF), the National Association of Manufacturers (NAM), the National Association of Home Builders (NAHB), the National Federation of Business (NFIB), the Small Business Majority, the National Association for the Self Employed (NASE), the Coalition for Affordable Health Coverage (CAHC), the Retail Industry Leaders Association (RILA), and the National Retail Federation (NRF).

SOURCE: Congressional press release, July 7, 2015.

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