Grassley co-sponsors companion to Small Business Healthcare Relief Act

Health InsuranceFrom Press Release


U.S. Sens. Chuck Grassley (R-IA) and Heidi Heitkamp (D-ND) have introduced bipartisan companion language to H.R. 2911 in S. 1697, otherwise known as the Small Business Healthcare Relief Act, to roll back existing Treasury Department guidance issued under the authority of the Affordable Care Act prohibiting the use of Health Reimbursement Arrangements.

Sept. 13, 2013, Treasury issued guidance disallowing employers from using stand-alone HRAs to reimburse employees for healthcare-related expenses, stating these arrangements did not satisfy the Affordable Care Act’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 U.S. Rep. Charles W. Boustany Jr. MD (R-LA) questioned Treasury Secretary Jack Lew on this issue in a Ways & Means hearing on Feb. 3, Treasury announced on Feb. 18 that it would delay enforcement of this guidance and resulting penalties until July 1.

The Small Business Healthcare Relief Act 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 healthcare 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
  • 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.”