It hasn’t been the easiest task getting small businesses on board for healthcare, as money can be an issue. The Health Reimbursement Arrangement (HRA) allows small businesses to reimburse employees for healthcare costs.
Under the Affordable Care Act (ACA), applicable large employers (ALEs), which are employers with 50 or more full-time and full-time equivalent employees, are required to offer health coverage to 95% of their employees. However, many small businesses, while not required, are urged to provide health coverage to their employees.
According to the Republican Senator, for years, small business owners have reimbursed their employees for the cost of buying health insurance on the individual market. However, the IRS has interpreted the ACA as barring this practice, now raising a serious concern of the viability of this practice.
Grassley proposed the Small Business Healthcare Relief Bill (Sen. 1697), which would open up the use of HRAs towards the purchase of health insurance in the state. Back in June, the House passed a variation of the relief bill for small businesses, as the IRS found several existing violations of the ACA (stemming from HRAs), leading to more costly penalties.
Earlier this year, Grassley proposed his bill with 167 small businesses behind him, in an effort to alleviate penalties imposed on small businesses that can’t afford them. Through this bill, smaller businesses can sponsor plans more affordably than before and employees can achieve healthcare with proper assistance. Grassley argued earlier this year something of an “if it ain’t broke don’t fix it” mantra, where if small businesses reimbursing their employees for healthcare has worked in the past, why change it now. That’s a fair question.
