Recently, the House of Representatives passed in unanimously on Small 
Business Act Healthcare relief, 2016 (SBHRA). The SBHRA intends to give small businesses the ability to pay their employees for the costs of health care out of pocket without being penalized. If SBHRA passes the Senate and is signed into law, the number of small companies that offer health insurance will likely fall.
Health Reimbursement Arrangements, explained
The SBHRA would reduce the use of health reimbursement arrangements (HRA). CRH allow companies to set aside a certain amount of money before taxes to pay their employees for health care expenses out of pocket, including for individual health insurance premiums. Stand-alone CRH CRH are not connected to a collective coverage offered by the company. Previously, small businesses - often those who could not afford to provide a global assurance group health - could use HRAs autonomous to pay their employees with pre-tax dollars for out-of-pocket health costs and premiums Medicare
.Unfortunately, in September 2013, the Ministry of Health and Social Services, the Ministry of Labour and the Department of the Treasury jointly issued directives curb the ability of small business owners to use HRAs because they have determined that these HRAs violated certain provisions of the affordable care Act (ACA).
Internal Revenue Service determined that most companies that offer self HRAs would be in violation of this policy and could be fined $ 100 per employee per day each year, up to $ 36,500 per employee. Because of this, many small businesses have been limited in the interest of health they could offer to their employees.
SBHRA, explained
The SBHRA adopted by the House of Representatives unanimously in June 2016 and is currently awaiting a vote in the Senate S. 3060. If is passed into law, the SBHRA will remove the financial sanctions that could be imposed against companies penalize for using self CRH.
The law also sets a small employer Health Reimbursement Arrangement qualified (QSEHRA), a type of HRA that would allow small businesses with fewer than 50 workers to use pre-tax money to help workers in their costs of health care out of pocket. QSEHRAs establish the company's contribution limits and also contain a requirement that employees must have a minimum coverage of essential health care.
Companies would be able to use QSEHRAs to reimburse workers for their out-of-pocket costs for health care, including co-pays, deductibles, monthly premiums individual health insurance and other eligible medical expenses. Companies that decide to use QSEHRAs have to warn their employees that QSEHRA is not insurance and therefore does not constitute a minimum essential coverage, which is required for many taxpayers under the ACA to avoid penalty individual mandate.
Related - Reference Guide HRA eligible expenses and medical insurance
potential impact of SBHRA Passage
given its bipartisan, unanimous support from the House, it is likely that the Senate will pass SBHRA. Once signed into law, two trends are possible. First, a number of small businesses currently offer group health insurance can drop their group coverage and replace it with a QSEHRA. This is partly because QSEHRAs are more flexible than the group health insurance coverage in that they allow employees to choose an individual health insurance plan that fits their budget and unique health needs. Also, QSEHRAs are often a more affordable option for small businesses that face ever rising costs of healthcare coverage group.
Second, it is likely that a greater number of small businesses that previously did offer health benefits will choose to use a QSEHRA. With the removal of penalties for doing so, this is an excellent option to help small businesses stay competitive in recruiting and retaining staff in the market driven by the current employee.
Conclusion
Determine whether to provide small business health insurance is something that every small business is facing. If SBHRA passes into law, this matter will be made simpler by offering small businesses a flexible and affordable option to help their employees pay for the costs of health care out of pocket.
What questions do you have about the impact of SBHRA? Let us know in the comments section below.
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