H.R. 5447 would create a new class of qualified small employer health reimbursement arrangements. (Photo: Allison Bell/LHP)

Members of the U.S. House of Representatives are getting ready to vote on H.R. 5447, a bill that could let small employers reimburse employees for individual health insurance premiums.

Related: GOP: Let small employers pay for individual health coverage

H.R. 5447, the Small Business Health Care Relief Act of 2016 bill, would let a small employer provide up to $5,130 in reimbursement for coverage that pays medical expenses for an individual employee and up to $10,260 in reimbursement for medical expense coverage for families.

The reimbursement caps would be adjusted for inflation.

The employer would have to warn an employee using a “qualified small employer health reimbursement arrangement” that the arrangement itself was not minimum essential coverage, or MEC (which many pronounce as “meck”).

An employee could use the new reimbursement arrangement to pay for MEC

Under the Affordable Care Act, many taxpayers now need to have MEC, or what the government defines as solid major medical coverage, to avoid paying an individual mandate penalty.

Rep. Charles Boustany, R-La., introduced H.R. 5447. At press time, House leaders said the measure could come to the House floor as early as Tuesday evening.

What the legislation would do

Republicans have had trouble getting similar health coverage-related measures to the Senate floor, but they have succeeded at getting some, such as postponement of an Affordable Care Act tax to be imposed on high-cost health plans, through Congress by attaching them to must-pass budget bills. 

H.R. 5447 would free a premium reimbursement arrangement from having to meet the rules that the ACA now applies to employer-sponsored group health plans.

The ACA prohibits individual major medical policies or group health plans from imposing annual or lifetime benefits payment limits on coverage for basic health benefits, or “essential health benefits.”

Federal regulators have ruled that any employer effort to reimburse employees for individual health coverage would create a group health plan, and that the reimbursement-based group health plan would have to provide unlimited annual and lifetime reimbursement benefits for the covered workers.

Related: 3 ways new PPACA employer rules could hit your clients

Supporters of letting small employers pay workers’ individual premiums without having to provide unlimited reimbursement benefits say regulators came up with that interpretation to keep small employers from dropping their health plans and sending employees into the individual market.

The National Federation of Independent Business, an organization that has been critical of the ACA, reported that 16 percent of the participants in a small-business survey it conducted are paying employees’ individual health premiums without providing unlimited reimbursement arrangements, even though that conflicts with regulators’ interpretation of the ACA requirements.

Related: 9 FAQs about HSAs, FSAs and HRAs

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