The House of Representatives today passed the 21st Century Cures Act, a comprehensive health care package that includes NAHB-supported legislation that would allow home building firms and other small businesses to provide Health Reimbursement Arrangements (HRAs) to help their employees pay for health insurance.
HRAs allow small businesses to offer pre-tax dollars to insured employees to help pay premiums and/or other out-of-pocket costs associated with medical care and services. Most small companies do not have human resource departments or benefits specialists. HRAs offer these businesses a simpler, easier way to help their employees to obtain health coverage.
“As a key driver of efforts to include HRAs in some type of year-end legislation, NAHB was thrilled to see it added to the 21st Century Cures Act,” said NAHB Chairman Ed Brady.
“We applaud Reps. Mike Thompson (D. Calif) and Charles Boustany (R. La.) for championing this cause and pushing to get the bill approved. This is a critical step in allowing small business owners to provide health care for their employees and protect employers against outrageous fines.”
The legislation would also protect employers from being financially penalized for providing this cost-sharing option to their workers.
The Internal Revenue Service issued guidance in 2013 stating that employers are no longer able to use HRAs because they don’t meet the requirements of the Affordable Care Act.
Not only did the IRS make HRAs illegal, the agency decreed that all employers can face fines of $100 per day per employee if they offer this benefit to their workers. That can add up to $36,500 per employee over the course of a year and up to $500,000 per company. This $100 per day penalty went into effect on July 1, 2015.
NAHB has led the charge working independently and with a coalition of other business organizations to remedy this injustice by calling on the IRS to revoke its ruling on the use of HRAs and pushing for a congressional solution.
At NAHB’s urging, a section was added to the 21st Century Cures Act that would reinstate the use of HRAs and rescind the punitive IRS penalties associated with them.
The Senate is expected to approve the 21st Century Cures Act shortly.
For more information, contact Suzanne Beall at 800-368-5242 x8407.