Law & Order

U.S. House of Representatives Passes Bill Protecting Small Businesses From Unfair Health Care Fines

By SEMA Washington, D.C., Staff

The U.S. House of Representatives unanimously passed legislation to eliminate fines imposed on companies with fewer than 50 employees that do not sponsor health care plans but provide pre-tax dollars to workers through Health Reimbursement Arrangements (HRAs). The bill has also been introduced in the Senate and has strong bipartisan support.

HRAs are employer-funded plans that allow a company to reimburse its workers for health care premiums and out-of-pocket medical expenses. In 2013, the Internal Revenue Service (IRS) ruled that the Affordable Care Act made it illegal for the company to fund HRAs not tied to a group plan. The Small Business Health Care Relief Act (H.R. 5447) allows these companies to use pretax dollars to continue providing health care assistance outside a group plan. If not enacted into law, the IRS will impose a $100 per day/per employee penalty for improperly using an HRA.  

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