Chamber Advocates for Federal Legislation to Bring Back HRAs for Small Businesses

February 22, 2016

The Michigan Chamber is advocating for passage of federal legislation to ensure small business owners can offer Health Reimbursement Arrangements (HRAs) to employees in order to help them pay premiums and/or other out-of-pocket costs associated with medical care and services.

In 2013, the Internal Revenue Service issued guidance dictating that all employers that fail to offer a group health plan, but provide tax preferred dollars through an HRA for their workers to pay health insurance premiums or other direct medical expenses, will be fined $100 per day, per employee. Over the course of a year, that’s $36,500 per employee and up to $500,000 in total. This $100 per day penalty went into effect on July 1, 2015.

The federal Small Business Healthcare Relief Act will allow small businesses that are not subject to the shared responsibility provision to provide HRAs to help their workers and families pay for premiums and/or other medical expenses. This provides small employers with necessary additional flexibility and allows those small companies – the majority of whom do not have human resource departments or benefits specialists – a simpler, easier way to help their employees with rising medical costs.

This legislation, if enacted, will provide relief on multiple fronts to small business employers by expanding affordable healthcare options, easing the burden of healthcare related administration, and allowing employers to remain competitive for purposes of recruitment and retention.

For more information, contact Wendy Block, Director of Health Policy & Human Resources, at or (517) 371-7678.