Reinstatement of HRAs Good News for Small Businesses

We’re glad the Senate passed the 21st Century Cures Act today, which will allow small businesses to provide Health Reimbursement Arrangements (HRAs) to employees with health insurance. These HRAs will permit businesses 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.

For many small employers, HRAs—tax-free funds that employees can use to purchase coverage on the individual market exchange or to cover out-of-pocket medical expenses—have long been a key tool for providing workers with affordable healthcare. For businesses with fewer than 50 employees, which may be unable to purchase group coverage for their employees, HRAs are a particularly crucial employer resource for helping workers afford healthcare.

If small businesses have found HRAs to be effective, it only makes sense to allow them to continue using HRAs to help provide employees with coverage. Additionally, we believe small employers shouldn’t face negative consequences for reasonable efforts to help employees purchase coverage, since the Affordable Care Act does not even require small employers to offer coverage.

While we support improvements like this to the Affordable Care Act, we believe it's crucial to uphold the law in full. Efforts to repeal or undermine the healthcare law will only create instability in the market, create confusion and make it more difficult for small employers and self-employed entrepreneurs to gain coverage. Instead, we should focus on smart legislation that will further improve and streamline the law, particularly when it comes to provisions impacting small businesses.

HRAs are one of the many resources in the toolboxes of small business owners who want to help their employees purchase insurance. We’re glad the Senate passed the 21st Century Cures Act today in order to help small employers gain more flexibility in the types of benefits they can offer their employees.