WASHINGTON, DC – U.S. Rep. Mike Thompson’s (CA-5) bipartisan legislation, the Small Business Healthcare Relief Act (H.R. 5477), passed the House Committee on Ways and Means today.

This legislation allows small employers to continue to offer Health Reimbursement Arrangements, or HRAs, to their employees so that they can choose a quality, affordable health insurance plan that fits their individual budget and health care needs.

Existing Treasury Department guidance under the Affordable Care Act limits the use of HRA’s for small businesses.

“HRA’s ease the administrative and financial burden of providing traditional insurance and allow small business owners to focus on what they do best – running their businesses,” said Thompson. “I thank my colleagues on the Ways and Means Committee for recognizing the value of HRA’s for our small business owners and for voting in support of my legislation.”

“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. I urge House leadership to bring this bill to the House floor as soon as possible to grant relief to small businesses suffering under these harsh penalties,” said Rep. Charles Boustany (R-LA).

On Sept. 13, 2013, The Department of Treasury issued guidance disallowing businesses from using HRA’s as a tax-free means to reimburse employees, stating these arrangements were disqualified under Affordable Care Act’s annual dollar cap.

The Small Business Healthcare Relief Act restores flexibility and choice into the marketplace by:

– Ensuring that small businesses are allowed to use pre-tax dollars to give employees a defined contribution.
– Allowing employees to use these funds as an HRA to purchase health coverage on the individual market, as well as for qualified out-of-pocket medical expenses.
– Protecting small business employers from being unnecessarily financially penalized for providing this option to employees.

The legislation is budget-neutral, meaning it won’t add a single dollar to our deficit. The bill is supported by the United States Chamber of Commerce, the National Federation of Independent Business (NFIB), the National Association of Manufacturers (NAM), the Retail Industry Leaders Association (RILA), the National Association of Homebuilders (NAHB), the National Association for the Self-Employed, and the Coalition for Affordable Healthcare (CAHC).

The legislation is now eligible for consideration by the full House of Representatives.

Thompson is proud to represent California’s Fifth Congressional District, which includes all or part of Contra Costa, Lake, Napa, Solano and Sonoma counties. He is a senior member of the House Ways and Means Committee. Rep. Thompson is also a member of the fiscally conservative Blue Dog Coalition and chairs the bipartisan, bicameral Congressional Wine Caucus.