H.R. 5447, the Small Business Health Care Relief Act of 2016

H.R. 5447

the Small Business Health Care Relief Act of 2016

Ways and Means

June 21, 2016 (114th Congress, 2nd Session)

Staff Contact
John Huston

Floor Situation

On Tuesday, June 21, 2016, the House will begin consideration of H.R. 5447, the Small Business Health Care Relief Act of 2016, under suspension of the rules. H.R. 5447 was introduced on June 10, 2016 by Rep. Charles Boustany (R-LA), and was referred to the Committee on Ways and Means, in addition to the Committees on Education and the Workforce, and Energy and Commerce. The Committee on Ways and Means ordered the bill reported, as amended, by voice vote on June 15, 2016.

Bill Summary

H.R. 5447 would create a safe-harbor for innovative employer payment arrangements. It specifically allows small businesses with fewer than 50 employees to give pre-tax dollars through a Health Reimbursement Arrangement (HRA), to help employees purchase a health plan in the individual market. It allows that HRA to be used to pay for qualified health expenses on a pre-tax basis. To qualify, an employee would need to have health insurance coverage, and reimbursement payments to any given employee would be capped at $5,130 ($10,260, if an HRA also provides for reimbursements for an employee’s family members), indexed for inflation. Under this proposal, employees would be prohibited from receiving a double benefit from qualifying HRAs and Obamacare premium tax credits. H.R. 5447 also establishes a number of notice and reporting requirements. The bill mandates that employers provide eligible employees with a written notice containing the amount of the employee’s permitted benefit and the bill requires that employers report contributions to a reimbursement arrangement on their employees’ W-2 form.


As a result of the September 2013 guidance issued jointly by the Department of the Treasury, Health and Human Services, and the Department of Labor, employers were prohibited from using Health Reimbursement Arrangements (HRAs) to support their employees’ purchase of health insurance on the individual market. This is because the Administration determined such an arrangement did not satisfy the Affordable Care Act’s minimum benefit and annual dollar cap requirements for health insurance plans offered by employers. Under the guidance, employers who continued to offer HRAs would be subject to a $100 per day, per employee penalty totaling up to $36,500 per year. These penalties went into effect on July 1, 2015. The Small Business Healthcare Relief Act responds to this agency action by allowing small businesses to use pre-tax Health Reimbursement Arrangements (HRAs) to financially assist their employees with the purchase of health coverage and related costs.

According to the bill sponsor, “The Small Business Healthcare Relief Act is a common-sense, bipartisan solution ensuring our small businesses aren’t penalized for trying to do the right thing. HRAs are an affordable solution for both employees and employers to combat the escalating cost of health insurance.”[1]

[1] See Rep. Charles Boustany, “Boustany’s Small Business Healthcare Relief Act Passes Committee, Sent to House Floor,” June 15, 2016.


The Joint Committee on Taxation estimates the bill will have no net effect on revenue over the FY2016-FY2026 period.

Additional Information

For questions or further information please contact John Huston with the House Republican Policy Committee by email or at 6-5539.