CAHC Joins Multi-Industry Effort to Save Small Businesses from $500,000 Fine

WASHINGTON (February 26, 2016) -- Today, the Council for Affordable Health Coverage and 166 health, restaurant, farming, auto care, and employer groups are standing up against an IRS mandate that threatens to fine small businesses up to $500,000 a year.  
 
This morning, the broad-based group sent a letter to House and Senate supporters of the Small Business Healthcare Relief Act  (H.R. 2911/S. 1697) -- in hopes of quashing IRS penalties on employers who offer tax-free Health Reimbursement Arrangements to help their employees purchase health insurance.
 
"Understandably, the movement for nixing this nonsensical fine has tremendous momentum." said CAHC President Joel White. "Not only does the bill have bipartisan, bicameral support, but at least 38 national groups and 129 state/local affiliates are on board." 
 
Without full-size HR departments for choosing company health plans, many small business employers have historically reimbursed employees for individually purchased health coverage via HRAs. But on July 1, the IRS deemed these arrangements impermissible, and said HRA-providing employers could be fined $100 per day, per employee. Upon learning the IRS could charge her $1,900 per day, Mississippi hair salon owner Lisa Cochran stopped giving her 19 employees $50 a month for premiums.
 
"In many cases, the IRS is giving small businesses an ultimatum," said White. "Shut down medical coverage funding for your employees, or shut down your business altogether." 
 
"Many small restaurant owners that are not subject to the employer mandate in the ACA still want to help their employees with their healthcare expenses," added Angelo Amador, senior vice president at the National Restaurant Association. "The bipartisan Small Business Healthcare Relief Act affords small businesses that opportunity by allowing them to use HRAs to help their workers and families pay for medical expenses."  
 
"If there's an opportunity for a bipartisan improvement toward affordable healthcare, the Small Business Healthcare Relief Act has to be it," said Kevin Kuhlman, director of federal public policy at the National Federation of Independent Business. "Penalizing small businesses for helping their employees purchase health insurance coverage was a perplexing regulatory decision. Passage of this bill before tax filing season would be a big relief for small business owners and employees."
 
CAHC and the other letter signers commended Senator Charles Grassley (R-IA), Senator Heidi Heitkamp (D-ND), Representative Charles Boustany (R-LA), and Representative Mike Thompson (D-CA) for sponsoring the bill, and urged prompt action. 
 
"The vast majority of home building firms employ less than 10 workers. This common-sense bipartisan legislation will allow them to offer affordable health care options for their employees, and we urge Congress to act quickly to pass it," said Ed Brady, chairman of the National Association of Home Builders.
 
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For the full text of the coalition letter and the full list of signers click here.
 
Concerned consumers can contact their congressional representatives here.
 
CAHC has created a whiteboard animation to provide a clear visual of exactly how the IRS fine affects employees and businesses. Check out the animation here.
 
For more information or to set up an interview with CAHC President Joel White, please contact Sandra Ramos at (202) 471-4228 ext. 115 or [email protected].   
 
About the Council for Affordable Health Coverage
The Council for Affordable Health Coverage believes that the cost of health coverage is too high and growing unsustainably; and that informed consumers, robust choices and competitive markets are the keys to building a more affordable, customer-friendly health system. CAHC's mission is to promote policies that lower health costs for all Americans. Read more at www.cahc.net.