Washington — The National Lumber and Building Material Dealers Association (NLBMDA) praises the passage today in the Senate of the 21st Century Cures Act (H.R. 34), which includes a provision backed and advocated by NLBMDA addressing small business health care affordability. Included in the larger medical innovation bill is the Small Business Health Care Relief Act, which protects small businesses from Internal Revenue Service (IRS) penalties and provides needed flexibility for business owners to assist their employees with health insurance premiums and healthcare expenses.
Last week, the House of Representatives overwhelmingly approved the legislation. The bill, which is supported by the White House, now awaits President Obama’s signature. NLBMDA supports the legislation and has spent part of the last two years working to pass the Small Business Health Care Relief Act.
On July 1, 2015, the IRS prohibited companies from using Health Reimbursement Arrangements (HRAs) to directly pay or reimburse individual market health premiums and medical expenses. As part of the IRS guidance, employers found in violation face penalties of $100 per day per employee (up to $500,000 annually).
Historically, HRAs have been a valuable option for small businesses wanting to help their employees pay for health expenses by allowing them 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. Employer contributions to the plan are 100 percent deductible, and tax-free to the employee, making it a great benefit to help workers obtain health insurance.
The Small Business Healthcare Relief Act provisions in the 21st Century Cures Act will:
• Ensure 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 healthcare expenses;
• Allow employees to use HRA 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; and,
• Protect employers from being financially penalized for providing this cost-sharing option to employees.
“NLBMDA is pleased that Congress has taken steps to address health care affordability for small businesses,” said Jonathan Paine, President and CEO of NLBMDA. “This is a victory for lumber dealers in their efforts to provide health care for their employees.”