The Small Business Health Care Relief Act could be the much-needed break that small business owners have been waiting for.
Life may soon get a bit easier for small business owners.
A bipartisan bill, the Small Business Health Care Relief Act, could potentially cut down the cost of healthcare, according to Forbes. Relief has been a long time coming: Healthcare costs have been owners’ No. 1 issue for three decades now.
The goal of the new bill is to allow small business owners to offer assistance to employees who purchase health insurance on their own, known as QSEHRAs, or “qualified small employer health reimbursement arrangements.”
“If signed into law, this new bill would let employers avoid the penalties they were subjected to with previous HRAs, and it would exempt QSEHRAs from certain requirements that apply to group health plans,” according to Forbes.
HRAs, or Health Reimbursement Arrangements, used to allow employers to “reimburse employees tax-free in an effort to help pay premiums and out-of-pocket medical expenses.” However, stand-alone HRAs were recently prohibited by the IRS.
“In 2013, the U.S. Treasury stated that by signing up for these types of arrangements, small business owners could be subject to penalties that were up to 18 times more than an equivalent applicable large employer would have to pay for not offering coverage at all,” Forbes reports.
The Small Business Health Care Relief Act aims to eliminate these regulations employers got caught in with HRAs. Basically, any employer who has less than 50 full-time equivalent employees and who doesn’t offer any group health plans is eligible for QSEHRAs to be used for qualified pre-tax health expenses.
If employers offer QSEHRAs to their employees, the plan must:
- Be provided on the same terms to all eligible employees
- Be funded solely by the employer without salary reduction contributions
- Provide payment or reimbursement for employees’ and their family members’ medical expenses only after the employee provides proof of coverage
- Limit annual payments and reimbursements to specified dollar amounts
This bill would be helpful to small business owners who are being “penalized under the ACA for offering HRAs with reimbursements on individual plans to their employees,” according to Forbes. The alternative is for employers to offer employer-sponsored group coverage; but this system isn’t perfect either. Due to rising health insurance, the number of small business owners who can actually afford group insurance has decreased from 42 percent in 2004 to 29 percent in 2015, according to NFIB.
Kevin Kuhlman, NFIB Legislative Affairs Director, said there are about 250 associations nationwide currently advocating for the bill.