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Association thanks legislators for Small Business Healthcare Relief Act

September 16, 2015 Washington — In response to the Small Business Healthcare Relief Act, the Association has sent letters to four key legislators, thanking them for their support in helping small business owners assist their employees in purchasing health insurance.

In July, U.S. Senators Chuck Grassley, R-Iowa, and Heidi Heitkamp, D-N.D., and Reps. Charles W. Boustany Jr., M.D., R-La., and Mike Thompson, D-Calif., introduced the bipartisan bill — H.R. 2911 in the House and S. 1697 in the Senate — known as the Small Business Healthcare Relief Act.

According to a joint press release issued by the legislators, the new bill aims to add choice to the current marketplace by:

  • Ensuring that small businesses and local municipalities with fewer than 50 employees are allowed to continue using pretax dollars to give employees a defined contribution for health care expenses.
  • Allowing employees to use HRA funds to purchase health coverage on the individual market, as well as for qualified out-of-pocket medical expenses if the employee has qualified health coverage.
  • Protecting employers from being financially penalized for providing this cost-sharing option to employees.

As of July 1, it's illegal for small businesses to use pretax dollars to assist employees with the purchase of individual health insurance policies. The U.S. Department of Labor ruled that such reimbursements constitute a group health plan, subjecting violators to fines of up to $36,500 annually per employee.

On behalf of the Association's more than 158,000 members—the vast majority of which employ fewer than 50 employees — ADA President Maxine Feinberg praised the legislators for their efforts:

"Thank you for introducing this important piece of legislation and for your continued support of small businesses," wrote Dr. Feinberg. "As small businesses, our members have no obligation to provide their employees' health care coverage but, as medical professionals, many dentist-employers understand the need for healthy employees and thus utilize the IRS's pretax health options as part of the benefits package."

Additional background on SBHRA can be found here.