Like Causes?

Install the App

house Bill H.R. 5860

Should Small Businesses Have More Options When Offering Employee Healthcare?

Argument in favor

Offering HRA’s is a more efficient way for small businesses to offer employees options for securing healthcare. The original ACA penalties would’ve crushed small businesses financially.

Argument opposed

The HRA penalties and taxes on employer provided healthcare penalties were meant to help fund the subsidies the ACA allows certain people to obtain.

What is House Bill H.R. 5860?

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.

HRAs are employer-funded medical reimbursement plans that pay employees back for individual health insurance premiums and medical expenses that they have paid for out-of-pocket.

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.


Small businesses and their employees, the Treasury Department.

Cost of House Bill H.R. 5860

A CBO cost estimate is unavailable.

More Information


In October 2013 the Treasury Department eliminated the ability of businesses to offer health reimbursement accounts (HRAs) and cafeteria plans. These were un-taxed means by which employers could help their employees purchase healthcare on the individual market. 

A penalty of $100 per day per participating employee would be assessed under this ruling, which could quickly accumulate into a substantial fine on a small business — which are defined as employing less than 50 workers.

Many organizations spoke out against this ban, including the Chamber of Commerce. In its discussions with the Department of Health and Human Services (HHS), the Chamber of Commerce recommended that the administration alter the law to allow HRA contributions to supplement employees’ purchases on the individual market, in the same way that employee purchases of group health insurance plans are permitted.


Sponsoring Rep. Mike Thompson (D-CA) Press Release

National Association for the Self-Employed (In Favor)

Chamber of Commerce (In Favor)

Forbes (Context)

Zane Benefits (Context)

(Photo Credit: Flickr user Wonderlane


Small Business Healthcare Relief Act of 2014

Official Title

To amend the Internal Revenue Code of 1986 to allow small businesses to use pre-tax dollars for assistance to employees purchasing policies in the individual market and except certain health reimbursement arrangements from group health plan requirements, and for other purposes.

bill Progress

  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Ways and Means
    IntroducedDecember 11th, 2014