House Approves Measure To End Small Business HRA Penalty

Date: June 24, 2016

Bill Would End Penalties For Some Small Businesses Covering Employees’ Out-Of-Pocket Medical Costs

Small businesses face mounting labor costs due to the burdensome regulations related to Obamacare. Now, some in Congress are taking action to help small businesses better cover their employees’ healthcare costs. The Small Business Health Care Relief Act was passed in the House this week, following its introduction earlier this month by Reps. Charles Boustany (R-LA) and Mike Thompson (D-CA). The measure, according to the New Orleans Times-Picayune, is designed to “end Obamacare penalties against small businesses that cover out-of-pocket medical costs for employees.” The bill aims to “shield companies with fewer than 50 employees from facing $100-a-day fines for each worker they employ if they continue to reimburse for premiums and other expenses.” Under current regulations, employers could face fines of as much as $36,500 per year per employee if they continue to use HRAs to reimburse employees’ health expenses. The Times-Picayune notes that the measure “is the latest in a three-year effort triggered when the departments of Labor and the Treasury, and the Internal Revenue Service sent notices to small businesses that their HRA plans ran counter to Obamacare regulations and that they could face penalties.” Such penalties, according to bill sponsor Rep. Boustany, “are just absurd, absurdly ridiculous and punitive. It will just wipe out small business.” He continued, “We want to help small businesses in every possible avenue for providing health coverage for their employees.”

What Happens Next

The measure must still pass the Senate, but the Times-Picayune reports that it appears the bill will face little resistance there.

What This Means For Small Businesses

Small businesses would greatly benefit from the Small Business Health Care Relief Act. As the Business Journals reports, the measure came about after NFIB and other business groups expressed concerns over IRS penalties for small businesses under Obamacare. According to NFIB data, the Journals notes, “14 percent of small businesses that don’t provide health insurance use reimbursement arrangements to help employees purchase insurance on their own.” Continuing to fine these employers “for trying to help their employees isn’t fair, NFIB contends.”

Additional Reading

Forbes also reported on the bill’s passage in the House.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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