This bill would modify a regulation under the Affordable Care Act (ACA) that prevents small businesses from using health reimbursement arrangements (HRA’s) because of the ACA’s annual spending cap.
Under H.R. 5860, small businesses would be allowed to use pre-tax dollars towards giving employees a defined contribution to their healthcare plan. Employees would then be allowed to use that contribution as an HRA to purchase health insurance on the individual market and for out-of-pocket medical expenses.
This bill also eliminates penalties on small businesses that would occur by providing their employees with HRA’s.