On April 12, ABC joined more than 60 national and multi-state organizations across the country in sending a letter
to members of the House Committee on Ways and Means urging them to take action on the Small Business Healthcare Relief Act (H.R. 2911
). The bill would allow small businesses that have fewer than 50 employees to offer employer payment plans and Health Reimbursement Arrangements (HRAs) to employees for the payment of premiums or qualified medical expenses associated with insurance coverage.
The letter emphasized that rising premiums have made providing health insurance particularly difficult for small businesses. Between 2010 and 2015, premiums paid by these employers rose by 25 percent and drove the average family premium up from $1,104 to $1,385 per month. To cope with these increases, many small businesses relied on employer payment plans, such as HRAs, to provide tax-advantaged contributions to employees for premiums and/or medical expenses.
However, in 2013, the Internal Revenue Service issued guidance stating that all employers that fail to offer a group health plan, but provide tax preferred dollars through an HRA for their workers to pay health insurance premiums or other direct medical expenses, will be fined $100 per day, per employee. The $100-per=day penalty went into effect on July 1, 2015, and amounts to $36,500 per employee over the course of a year. These fines are capped at $500,000 per year, an amount that is 18 times greater than the penalty for large firms that do not comply with the employer mandate.
In light of the threat of heavy fines, the letter warns that many small business employees will lose employer-provided benefits. As a result, these employees likely will spend more on healthcare.
ABC has consistently supported the Small Business Healthcare Relief Act and joined a previous letter
to House and Senate committee leaders in March to promote its passage.