Health Reform WK-EDGE House Ways and Means Committee approves various health care tax relief bills
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Monday, June 27, 2016

House Ways and Means Committee approves various health care tax relief bills

By Jessica Jeane

The House Ways and Means Committee held a markup of eight bills on June 15. Seven of the bills focused on health care-related tax implications.

These bills support the "wild notion that tax deductions will somehow pay for themselves," ranking member Sander Levin (D-Mich) said. The concern among many committee Democrats during the markup was that passing the health care tax bills at issue, with no offsets offered, would increase the federal deficit. "This committee is embracing social democratic ideals apparently, offering a lot of free stuff to people with no way of paying for it," Rep. Ron Kind (D-Wisc) said.

Small business bill. The committee approved the bipartisan Small Business Health Care Relief Bill (HR 5447), by voice vote. The bipartisan bill, sponsored by Reps. Charles Boustany (R-La) and Mike Thompson (D-Cal) now heads to the House floor, along with the seven other bills passed during the markup.

If enacted, HR 5447 would create a safe harbor for innovative employer payment arrangements, a Health Reimbursement Arrangement (HRA). The bill would "allow small employers the freedom to reimburse their employees for health care coverage," Brady said.

Under the Internal Revenue Code, "an employer is generally subject to an excise tax of $100 a day per employee if it sponsors a group health plan" that fails to meet certain requirements, according to the Joint Committee on Taxation’s (JCT) report on the bill (JCX-47-16). "IRS guidance holds that employer payment plans generally fail to meet certain group health plan requirements." Additionally, an HRA cannot meet those requirements unless it is offered in conjunction with employer-sponsored coverage, the JCT report noted. "An employer may be subject to an excise tax if it provides an employer payment plan or a stand-alone HRA", it added.Boustany described the $100 penalty as "draconian." "Small businesses need relief," he concluded.

Senate. Senators Charles E. Grassley (R-Iowa) and Heidi Heitkamp (D-ND) on June 15 released an updated version of their bill that also focuses on allowing small businesses, through HRAs, to help employees purchase health coverage. Their version of the Small Business Health Care Relief Bill (Sen 3060), "would allow small businesses to reimburse their employees on a pre-tax basis for the purchase of health insurance on the individual market," Grassley said in a statement. "I hope that with today’s action in the Ways and Means Committee, it’s only a matter of time before this legislation becomes law."

HSAs.  HR 5445, aimed at increasing availability of health savings accounts (HSAs), was approved by a 23-to-15 vote. The bill would raise the limit on contributions and allow spouses to make "catch-up" contributions to the same account. According to Levin, however, the bill would leave "$20 billion unpaid for and the primary beneficiaries as people who are better off." He added, "Once again, there you march to help families better off and not pay one dime for it."

According to Rep. Xavier Becerra (D-Cal), less than 1 percent of individuals would take advantage of the HSA tax break offered by the bill, those being the wealthiest. Rep. Erik Paulsen (R-Minn) disagreed and said that, in actuality, the vast majority of people with HSAs are middle class, not wealthy individuals. JCT Chief of Staff Thomas Barthold agreed with Paulsen‘s statement.

HR 5452, also addressing HSAs, passed by voice vote. The bill would allow individuals eligible for Indian Health Service assistance to qualify for health savings accounts.

ACA repeals. The Tribal Employment and Jobs Protection Bill (HR 3080), passed by a 24-to-13 vote. The bill would exempt tribally owned businesses from the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) employer mandate.

The Student Worker Exemption Bill of 2015 (HR 210), passed by voice vote. The bill would exempt Universities that employ student workers from the ACA employer mandate.

The Halt Tax Increases on the Middle Class and Seniors Bill (HR 3590) passed by a 24-to-11 vote. The bill would make it easier to deduct medical expenses.

Legislation: FederalLegislation DependentCoverageNews EmployerMandateNews PenaltyNews SmallBusinessNews

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