House Passes Cures Bill Allowing Certain Small Business Sponsored HRAs

the rascon cpa firm, cpa services, accountant, accounting firm, tax planning, tax law, tax preparation, the woodlands, texasThe House passed the much anticipated 21st Century Cures Bill (HR 34) on November 30 by a 392 to 26 vote. The bipartisan measure now heads to the Senate for consideration. Among its provisions, HR 34 would essentially exempt certain small employers who operate qualified Health Reimbursement Accounts (HRAs) from the penalties imposed by the Patient Protection Affordable Care Act (PPACA).

“This has been a long time coming. This is going to be a game-changer,” House Speaker Paul Ryan, R-Wisc., said November 30 in support of the bill. According to Rep. Ben Ray Lujan, D-N.M., the bill is good, even if imperfect.

HR 34 would amend the Internal Revenue Code to allow qualified HRAs to operate without penalty. Qualification of these HRAs for small businesses would require adherence to certain limits, including:

  • -Funding solely by employer contributions, with no salary reduction contributions;
  • -Coverage obtained by a participating employee through an affordable ACA plan;
  • -Benefits capped, in general, at $4,950 per year ($10,000) for families;
  • -Proration of benefits for partial-year coverage;
  • -No group health plan offered to any employee; and
  • -Adherence to notification and reporting requirements. “Once the House votes on the Cures bill, the Senate will consider this measure and send it to President Obama’s desk,” Senate Majority Leader Mitch McConnell, R-Ky., said November 30 on social media.
  • HR 34 retroactively extends the initial penalty relief provided to small businesses under Notice 2015-17, I.R.B. 2015-14, 845, to apply to any plan year beginning on or before December 31, 2016. The specific HRA requirements for qualified small employers specified within the bill would apply to years beginning after December 31, 2016.