Will Congress Help Small Businesses By Reviving HRAs?

Written by: Christina Merhar
Originally published on February 24, 2015. Last updated August 24, 2018.

Last week, the IRS delayed penalties for non-compliant Health Reimbursement Arrangements (HRAs) and Employer Payment Plans until July 1, 2015. However, according to Rep. Charles Boustany (R-LA), this is not enough help for small businesses. What would really help small businesses, says Boustany, is to revive stand-alone HRAs. As such, Boustany says he is planning on re-introducing legislation to do just that. Here's what you need to know about the current state of HRA legislation. Will Congress Help Small Businesses By Reviving HRAs?


Historically, HRAs have been an affordable tool used by the small business community to help recruit and retain quality employees while staying competitive with larger businesses. Stand-alone HRAs allowed employers to reimburse employees tax-free for medical expenses, including individual health insurance premiums.

However, with health reform came changes to how employers can use stand-alone HRAs. Long story short, new prohibitions on annual limits caused most stand-alone HRAs to be non-compliant. Under these new "Market Reforms," employers with a non-compliant HRA or a non-compliant Employer Payment plan are now subject to hefty fees.

So, when the IRS announced last week they would delay penalties, many in the small business community felt a sense of relief. They had more time to transition to a compliant reimbursement plan before they faced fees.

However, as Boustany noted, the delay on fees is only a short-term fix when the root problem is the Administration’s HRA policy. According to Boustany, the delay “shows the Administration acknowledges that placing limitations on HRA’s is bad policy, but a short-term delay just isn’t good enough for small businesses and their employees.”

Congress Should Help Small Businesses By Reviving HRAs

The solution? Revive the HRA by making stand-alone HRAs exempt from group health plan rules.

In December 2014, Boustany and Mike Thompson (D-CA) introduced legislation to do just this. As we wrote about previously, Boustany and Thompson introduced the bipartisan Small Business Healthcare Relief Act, legislation that would permanently reverse the current restrictions on HRAs, and give more flexibility to businesses and their employees when working with health insurance coverage options.

According to Boustany’s website, he plans to reintroduce the bill for the 114th Congress in the coming weeks.

According to Boustany, “Moving forward, I will reintroduce my Small Business Healthcare Relief Act and aggressively pursue its signature into law. The American people were promised choice and flexibility when making health care decisions – the Small Business Healthcare Relief Act will follow through on that promise. The Administration, Republicans, and Democrats should all support this common-sense and bipartisan bill.”


As the bill is reintroduced to Congress in the coming weeks, Congress should support small businesses by removing restrictions on stand-alone HRAs. HRAs give small businesses and their employees access to more affordable health care, while providing the same tax benefits larger corporations recieve toward employer-provided healthcare.


Congress introduced revised language for the Small Business Healthcare Relief Act on June 25, 2015. This legislation is vital to the small business community! Visit our legislative resource page for detailed information, including how you can help this proposed legislation become law.

What do you think? Do you think HRAs should be revived? If introduced, do you think Congress will support small businesses by reviving HRAs? Leave a comment. We’d love to hear your opinion.

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Topics: QSEHRA
Originally published on February 24, 2015. Last updated August 24, 2018.


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