WASHINGTON – Sen. Chuck Grassley of Iowa today welcomed the latest support for his bipartisan, bicameral bill to give small businesses relief from onerous penalties under the President’s health care law if they continue to help their employees with health care costs. The number of organizations and small businesses that support his Small Business Healthcare Relief Act (S. 1697) is up to 167, including the Iowa Association of Business and Industry and the Iowa Restaurant Association.
“I’ve heard from farmers, small business owners and accountants who are worried about getting hit with a penalty for something they’ve done for a long time without any controversy,” Grassley said. “It doesn’t make sense to tell small employers that they can’t help their employees get health insurance. Why disrupt something that worked? The bill puts this provision back to what it was so farmers and small businesses can use this option as they see fit.”
The coalition supporting the legislation said, “This is a bipartisan opportunity to improve affordable health care options for small businesses, and we urge Congress to move swiftly to pass this vital legislation so that more small employers can help their workers defray the high cost of insurance premiums and/or other out-of-pocket medical expenses.”
Under the Affordable Care Act, known as Obamacare, small businesses are barred from giving their employees money to help with health insurance premiums or other health care expenses through Health Reimbursement Arrangements. The rationale is that these arrangements do not satisfy the Affordable Care Act’s minimum benefit and annual dollar cap requirements for health insurance plans offered by employers. As a result, employers that continue to offer these arrangements are subject to a $100 per day per employee penalty, totaling up to $36,500 over the course of the year.
After Congress and small business owners expressed concern about the penalties’ going into effect, the IRS announced that it would delay enforcement until July 1, 2015. The current tax season is the first one in which small business owners face the penalties.
Grassley’s bill, introduced with Sen. Heidi Heitkamp of North Dakota as the lead Democrat, would restore the ability of small businesses to use the Health Reimbursement Arrangements that worked for their employees. The Small Business Healthcare Relief Act would:
--Ensure that small businesses and local municipalities with fewer than 50 employees are allowed to continue using pre-tax dollars to give employees a defined contribution for health care expenses.
--Allow employees to use Health Reimbursement Arrangement funds to purchase health coverage on the individual market, as well as for qualified out-of-pocket medical expenses if the employee has qualified health coverage.
--Protect employers from being financially penalized for providing this cost-sharing option to employees.
Grassley is talking with the leaders of the committee of jurisdiction, the Finance Committee, about taking up the bill as soon as possible. A companion bill is pending in the House of Representatives.
The letter today from the coalition of 167 organizations and small businesses supporting the bill is available here.
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