Small Business Applauds Committee Action on Bill Nixing IRS Penalties for Health Care Reimbursements

Date: June 15, 2016

National Federation of Independent Business calls on full House to support measure allowing employers to help workers pay for health insurance or medical visits

For Immediate Release
Andrew Wimer, 202-314-2073 or 703-298-5938 (cell)
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Washington, D.C. (June 15, 2016) – A bill that would scrap IRS penalties on employers who reimburse workers for the cost of health insurance, which the House Ways and Means Committee is considering today, should pass the Congress with overwhelming bipartisan support, said the National Federation of Independent Business (NFIB).

“Small business owners who help workers buy insurance or pay for medical visits are doing exactly what the President says he wants,” said NFIB President and CEO Juanita Duggan.  “Every member of Congress who claims to care about small business and access to health care can prove it by voting for this legislation.”    

Last July the IRS announced a new penalty on employers who reimburse their workers for the cost of health care or medical visits.  Neither the penalty nor the reason for it appears anywhere in Affordable Care Act.  Nevertheless, employers who run afoul of the new rule face fines of $100 per day, per worker.  That amounts to $36,500 a year, which is 18 times bigger than the penalty imposed on larger employers that don’t offer insurance to their workers.

“That’s completely upside down,” said Duggan.  “Small businesses that help workers purchase insurance are penalized more heavily than larger companies that don’t provide any insurance.” 

Under the measure (H.R. 5447), small business owners would be allowed without penalty to compensate employees for the cost of individual insurance or medical visits. NFIB, which called national attention to the IRS penalty last year, strongly supports the legislation.

“The President has said many time that he’s willing to fix problems with the ACA,” said Duggan.  “This would seem to be an easy vote even for the strongest supporters of the health care law.”  

Duggan noted that many small business owners who are acting in good faith still don’t realize that they’re potentially causing themselves a massive financial headache by helping their workers.

“According to our own research, nearly 1 in 6 small employers were providing this compensation last year,” she said. “The government should not bankrupt an employer just because they want to contribute to an employee’s health care. There is absolutely no evidence that Congress wanted to ban this common practice. We’re grateful for the action of the Ways and Means Committee and hope that the bill proceeds promptly to the House floor.”

For more information about NFIB, please visit www.nfib.com

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