Members of the Senate today approved sending the 21st Century Cures Act package to the White House by a vote of 94 to 5. (Photo: Thinkstock)

Small employers will probably be able to give workers cash for individual health coverage premiums in 2017 without worrying about the federal government coming after them.

Members of the Senate today made that likely by voting 94 to 5 for a motion that will send H.R. 34, the 21st Century Cures Act package, to President Obama for his signature.

High-profile parts of the bill provide $3 billion in funding for researching Alzheimer’s disease and other conditions, $1.8 billion in cancer research funding and $1 billion in funding for efforts to fight opioid abuse.

President Obama put out a statement welcoming Senate approval of H.R. 34.

“We are now one step closer to ending cancer as we know it,” Obama said in the statement.

The H.R. 34 package also includes major mental health parity provisions, and a section at the very end, Section 18001, that clarifies how the federal government will treat small employer efforts to use stand-alone health reimbursement arrangements to give workers cash they can use to pay the premiums for individual health coverage.

Related: 5 surprises in the 21st Century Cures Act

The provision, which is set to apply to plan years beginning after Dec. 31, 2016, would let small employers use “qualified small employer health reimbursement arrangements” to reimburse workers for up to $4,950 per year for employee-only coverage and up to $10,000 for family coverage. The employees using the arrangement would have to show they had health coverage.

The reimbursement cap would be adjusted for inflation.

An employer using the provision would have to fund the HRA itself. An employer could not use salary reduction mechanisms to fund the HRAs.

In the past, Obama administration agencies have argued that a stand-alone cash-for-coverage arrangement is really a major medical plan, for purposes of Affordable Care Act compliance, and had to meet all of the ACA requirements that apply to major medical plans, such as the ban on annual and lifetime benefits limits.

Obama administration officials and some insurers had also argued that small employers should be discouraged from using cash-for-coverage arrangements, because they could affect the level of health risk in the small-group market and potentially destabilize either the individual market or the traditional small-group major medical market.

The Nashville, Tennessee-based National Federal of Independent Business reported that many small employers have been offering cash for coverage without knowing they might be violating federal rules.

Related:

5 ways scientists could supercharge long-term care insurance

How a U.S. House mental health bill could affect insurers

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