House Passes Revamped Employer Cash-for-Coverage Bill

What You Need to Know

H.R. 3799 would make the regulations now supporting employer cash-for-arrangements part of the Internal Revenue Code.
House leaders have added association health plan and stop-loss provisons to the bill.
The bill passed in the House without any votes from Democrats.

Members of the U.S. House voted 220-209 Wednesday to pass an expanded version of H.R. 3799 — a bill that could support employer efforts to give workers cash they can use to buy their own individual coverage.

The Custom Health Option and Individual Care Expense (CHOICE) Arrangement Act bill would add a cash-for-coverage provision to the Internal Revenue Code. The provision would be similar to the federal regulations that already let employers offer individual coverage health reimbursement arrangements (ICHRAs).

Supporters say H.R. 3799 would increase employer comfort with cash-for-coverage programs based on a health reimbursement arrangement framework because employers might see a federal law blessing an HRA-based approach as more stable than the existing ICHRA regulation.

When the House Rules Committee packaged H.R. 3799 for action on the House floor, it combined the original language with other group health benefits provisions.

What It Means

Increased federal support for HRA-based cash-for-coverage arrangements could help lure health insurers, and financial professionals back into the individual health insurance market.

Some Democrats have supported past efforts to let employers use HRAs to provide cash for individual coverage.

But the expanded version of H.R. 3799 looks as if it will have a harder time reaching the Senate floor than a stand-alone cash-for-coverage bill.

H.R. 3799

Rep. Kevin Hern, R-Okla., introduced H.R. 3799. The bill has no Democratic co-sponsors.

The Backdrop

States can regulate individual health policies purchased by workers using employer cash, but skeptics fear that employer cash-for-coverage arrangements could destabilize either the individual market or the small group market, by pushing older, sicker workers one way or the other.

Traditionally, many Democrats, health insurers and state insurance regulators have seen the use of association health plans and stop-loss insurance as mechanisms for helping employers avoid complying with state health insurance regulations.

All House Republicans who voted on H.R. 3799 Wednesday backed the bill, but all Democrats who voted opposed it.

The party-line vote suggests that the expanded version of the bill could have a hard time winning support from Democrats in the Senate.