House Passes 21st Century Cures Act with HRA Provisions


Last night, the House of Representatives voted 392-26 to pass H.R. 34, the vehicle for the 21st Century Cures Act. Republicans voted 218-20 and Democrats voted 174-6 in favor of the legislation.

This bill contains a provision regarding small business health reimbursement arrangements (“HRAs”) that was one of ECFC’s top legislative priorities.  (This provision is in section 18001 of the bill and can be found on page 824 of the bill text attached.) This provision would establish new small employer health reimbursement arrangements so that eligible small employers can offer a health reimbursement arrangement funded solely by the employer that would reimburse employees for qualified medical expenses including health insurance premiums.  The maximum reimbursement that can be provided under the plan is $4,950 or $10,000 if the plan provided for family members of the employee.  An employer is eligible to establish a small employer health reimbursement arrange if that employer (i) is not subject to the employer mandate under the Affordable Care Act (i.e., less than 50 full time employees) and (ii) does not offer a group health plan to any employees. The bill provides that employees that are covered by this health reimbursement arrangement will not be eligible for subsidies for health insurance purchased under an exchange during the months that they are covered by the employer’s health reimbursement arrangement. 

For eligible small employers, this bill would overturn guidance issued by the Internal Revenue Service and the Department of Labor that stated that these arrangements violated the Affordable Care Act insurance market reforms and were subject to a penalty for providing such arrangements.  The agency guidance would still prohibit these arrangements for larger employers. The provision is effective for plan years beginning after December 31, 2016.  (There was transition relief for plans offering these benefits that ends December 31, 2016.)

Please find attached the bill text as released on November 25, the manager’s amendment offered by Rep. Fred Upton (R-MI), and a summary of the revised bill as it was passed.

The Senate is expected to take up the measure without amendment early next week.


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About Employers Council on Flexible Compensation

The Employers Council on Flexible Compensation (ECFC) is a non-profit organization dedicated to the maintenance and expansion of private employee benefit programs on a tax-advantaged basis. The organization has two driving missions. The first is to represent and promote flexible compensation programs through effective lobbying. The second is to provide information on flexible compensation programs to member, national opinion leaders and the general public to help create a positive climate for the growth of flexible compensation.