[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 1697 Introduced in Senate (IS)]
114th CONGRESS
1st Session
S. 1697
To provide an exception from certain group health plan requirements to
allow small businesses to use pre-tax dollars to assist employees in
the purchase of policies in the individual health insurance market, and
for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 25, 2015
Mr. Grassley (for himself and Ms. Heitkamp) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To provide an exception from certain group health plan requirements to
allow small businesses to use pre-tax dollars to assist employees in
the purchase of policies in the individual health insurance market, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Healthcare Relief
Act''.
SEC. 2. EXCEPTION FROM GROUP HEALTH PLAN REQUIREMENTS TO ALLOW SMALL
BUSINESSES TO USE PRE-TAX DOLLARS TO ASSIST EMPLOYEES IN
THE PURCHASE OF HEALTH INSURANCE IN THE INDIVIDUAL
MARKET.
(a) Amendments to the Internal Revenue Code of 1986 and the Patient
Protection and Affordable Care Act.--
(1) In general.--Section 9831 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(d) Certain Individual Health Insurance Policies Obtained Through
Small Employers.--
``(1) In general.--The requirements of this chapter shall
not apply to any qualified small employer health reimbursement
arrangement.
``(2) Qualified small employer health reimbursement
arrangement.--For purposes of this subsection--
``(A) In general.--The term `qualified small
employer health reimbursement arrangement' means an
arrangement which--
``(i) is described in subparagraph (B), and
``(ii) is offered on the same terms to all
eligible employees of the eligible employer.
``(B) Arrangement described.--An arrangement is
described in this subparagraph if--
``(i) such arrangement is funded solely by
an eligible employer and no salary reduction
contributions may be made under such
arrangement, and
``(ii) such arrangement provides, after the
employee provides proof of coverage to the
employer, for the payment of, or reimbursement
of, an eligible employee for--
``(I) expenses for medical care (as
defined by subparagraphs (A), (B), and
(C) section 213(d)) incurred by the
eligible employee or the eligible
employee's family members (as
determined under the terms of the
arrangement), and
``(II) including for--
``(aa) insurance (within
the meaning of section
213(d)(1)(D)) purchased on the
individual health insurance
market, and
``(bb) premiums under part
B of title XVIII of the Social
Security Act and any medicare
supplemental policy under
section 1882 of such Act.
``(C) Payments for other insurance not permitted
under arrangement.--An arrangement shall not be treated
as described in subparagraph (B) if the arrangement
permits the employee to pay premiums for health
insurance coverage for the employee under the
employee's spouse or other family member health
insurance coverage.
``(D) Certain variation permitted.--For purposes of
subparagraph (A)(ii), an arrangement shall not fail to
be treated as offered on the same terms to all eligible
employees merely because the employer contributions
under such arrangement vary based on the number of
individuals covered under such policy. The preceding
sentence shall not apply unless such variation is
consistently applied to all eligible employees and is
consistent with the price variation of coverage under
health insurance obtained in the relevant individual
health insurance market.
``(3) Other definitions.--For purposes of this subsection--
``(A) Eligible employee.--The term `eligible
employee' means any employee of the employer except
that the terms of the arrangement may exclude from
consideration employees described in any clause of
section 105(h)(3)(B) (applied by substituting `90 days'
for `3 years' in clause (i) thereof).
``(B) Eligible employer.--The term `eligible
employer' means an employer that--
``(i) is not an applicable large employer
as defined in section 4980H(c)(2), and
``(ii) does not offer a group health plan
(other than a qualified small employer health
reimbursement arrangement) to any of its
employees.
``(C) Individual health insurance policy.--The term
`individual health insurance policy' means individual
health insurance coverage (as defined in section
2791(b) of the Public Health Service Act) which is
offered by a health insurance issuer (as so defined in
such section).''.
(2) Exclusion from gross income.--Section 106 of such Code
is amended by adding at the end the following:
``(g) Qualified Small Employer Health Reimbursement Arrangement.--
``(1) In general.--In the case of an individual who is an
eligible employee (as defined in paragraph (3)(A) of section
9831(d)) with respect to an eligible employer (as defined in
paragraph (3)(B) of such section), the applicable percentage of
the aggregate contributions made for the taxable year by the
eligible employer under a qualified small employer health
reimbursement arrangement (as defined in paragraph (2) of such
section) with respect to the employee shall be treated as
employer-provided coverage for medical expenses under an
accident or health plan.
``(2) Applicable percentage.--For purposes of paragraph (1)
the applicable percentage shall be--
``(A) 25 percent if the employee is covered for
less than 3 months in the taxable year by the qualified
small employer health reimbursement arrangement and the
employee draws amounts from the arrangement in any
month during which the employee is not so covered,
``(B) 50 percent if the employee is covered for
more than 3 months but less than 6 months in the
taxable year by the qualified small employer health
reimbursement arrangement and the employee draws
amounts from the arrangement in any month during which
the employee is not so covered,
``(C) 75 percent if the employee is covered for
more than 6 months but less than 9 months in the
taxable year by the qualified small employer health
reimbursement arrangement and the employee draws
amounts from the arrangement in any month during which
the employee is not so covered, and
``(D) 100 percent if the employee is covered for
more than 9 months in the taxable year by the qualified
small employer health reimbursement arrangement.
``(3) Rule for special enrollment.--In the case of an
employee who first becomes covered under the qualified small
employer health reimbursement arrangement by reason of
enrollment during a special enrollment period for qualifying
events (under section 603 of Employee Retirement Income and
Security Act), in lieu of paragraph (2) the applicable
percentage shall be the ratio (expressed as a percentage)
that--
``(A) the number of the months in the taxable year
for which such employee is covered by such arrangement,
bears to
``(B) the total number of months in the taxable
year for which such employee is eligible to be covered
by such arrangement.''.
(3) Exception from continuation coverage requirements.--
Section 4980B(d) of such Code is amended by striking ``or'' at
the end of paragraph (2), by striking the period at the end of
paragraph (3) and inserting ``, or'', and by adding at the end
the following new paragraph:
``(4) any qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2)).''.
(4) Exception from excise tax on high cost employer-
sponsored health coverage.--Section 4980I(d)(2) of such Code is
amended by redesignating subparagraph (D) as subparagraph (E)
and by inserting after subparagraph (C) the following:
``(D) In the case of applicable employer-sponsored
coverage consisting of coverage under any qualified
small employer health reimbursement arrangement (as
defined in section 9831(d)(2)), the cost of the
coverage shall be the amount reported under section
6051(a)(15).''.
(5) Prevention of double benefit under health insurance
premium credit.--Section 36B(c)(2) of such Code is amended by
adding at the end the following new subparagraph:
``(E) Special rule for certain individual health
insurance policies obtained through small employers.--
``(i) In general.--The term `coverage
month' shall not include any month with respect
to an employee if for such month the employee
is offered affordable coverage under an
individual health insurance policy (as defined
under section 9831(d)(3)(C)) under a qualified
small employer health reimbursement arrangement
(as defined in section 9831(d)(2)).
``(ii) Affordable.--For purposes of clause
(i), coverage shall be treated as affordable
for a month if--
``(I) \1/12\ of the employer's
contribution to the employee for a year
under such arrangement is not less than
the amount that would be paid by the
employee for the premium for such month
for the applicable second lowest cost
self-only silver plan for self-only
coverage with respect to the employee's
individual market, and
``(II) the employee's cost for
coverage under the individual health
insurance policy under the qualified
small employer health reimbursement
arrangement for a year does not exceed
the 9.5 percent of the employee's
household income.''.
(6) Employee notice.--Section 101 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1021) is
amended by adding at the end the following:
``(o) Notice Relating to Health Reimbursement Arrangements.--An
employer maintaining a qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2) of the Internal Revenue
Code of 1986) shall, upon an election by an employee to participate in
such qualified small employer health reimbursement arrangement, provide
notice to the employee that if the employee is not covered under such
arrangement for at least 9 of 12 months in the plan year, any funds
under such arrangement may be includible in gross income.''.
(7) Reporting.--
(A) W-2 reporting.--Section 6051(a) of such Code is
amended by striking ``and'' at the end of paragraph
(13), by striking the period at the end of paragraph
(14) and inserting ``, and'', and by inserting after
paragraph (14) the following new paragraph:
``(15) the total amount of employer contributions made for
the year under a qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2)) with respect to
the employee.''.
(B) Information required to be provided by exchange
subsidy applicants.--
(i) In general.--Section 1411(b)(3) of the
Patient Protection and Affordable Care Act is
amended by redesignating subparagraph (B) as
subparagraph (C) and by inserting after
subparagraph (A) the following new
subparagraph:
``(B) Certain individual health insurance policies
obtained through small employers.--The months (if any)
which the enrollee has or expects to have coverage
under an individual health insurance policy (as defined
in section 9831(d)(3)(C) of the Internal Revenue Code
of 1986) provided under a qualified small employer
health reimbursement arrangement (as defined in section
9831(d)(2) of such Code).''.
(ii) Special rule relating to verification
of information required to be provided by
exchange applicants.--Verification under
section 1411 of the Patient Protection and
Affordable Care Act of information provided
under section 1411(b)(3)(B) of such Act shall
apply with respect to months beginning after
October 2016.
(8) Effective date.--The amendments made by this subsection
shall apply to months beginning after the date of the enactment
of this Act.
(b) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 732 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1191a) is amended by
redesignating subsection (d) as subsection (e) and by inserting
after subsection (c) the following new subsection:
``(d) Exception for Certain Individual Health Insurance Policies
Obtained Through Small Employers.--The requirements of this part shall
not apply to any qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2) of the Internal Revenue
Code of 1986).''.
(2) Exception from continuation coverage requirements.--
Section 601 of such Act (29 U.S.C. 1161) is amended by adding
at the end the following new subsection:
``(c) Exception for Certain Individual Health Insurance Policies
Obtained Through Small Employers.--Subsection (a) shall not apply to
any qualified small employer health reimbursement arrangement (as
defined in section 9831(d)(2) of the Internal Revenue Code of 1986).''.
(3) Exception from certain other group health plan
requirements.--Section 609 of such Act (29 U.S.C. 1169) is
amended by redesignating subsection (e) as subsection (f) and
by inserting after subsection (d) the following new subsection:
``(e) Exception for Certain Individual Health Insurance Policies
Obtained Through Small Employers.--The requirements of this section
shall not apply to any qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2) of the Internal Revenue
Code of 1986).''.
(4) Effective date.--The amendments made by this subsection
shall apply to months beginning after the date of the enactment
of this Act.
(c) Amendments to Public Health Service Act.--
(1) In general.--Part C of title XXVII of the Public Health
Service Act (42 U.S.C. 300gg-91 et seq.) is amended by adding
at the end the following new section:
``SEC. 2796. EXCEPTION FOR CERTAIN SMALL EMPLOYER PLANS TO PROVIDE
INDIVIDUAL HEALTH INSURANCE POLICIES.
``(a) In General.--The requirements of this title shall not apply
to any qualified small employer health reimbursement arrangement (as
defined in section 9831(d)(2) of the Internal Revenue Code of 1986).
``(b) Exception Not Applicable to Individual Health Insurance
Offered Under the Plan or Arrangement.--Subsection (a) shall not apply
with respect to any individual health insurance policy (as defined in
section 9831(d)(3)(C) of such Code) offered under any such
arrangement.''.
(2) Exception from continuation coverage requirements.--
Title XXII of the Public Health Service Act (42 U.S.C. 300bb-1
et seq.) is amended by adding at the end the following new
section:
``SEC. 2209. EXCEPTION FOR CERTAIN SMALL EMPLOYER PLANS TO PROVIDE
INDIVIDUAL HEALTH INSURANCE POLICIES.
``The requirements of this title shall not apply to any qualified
small employer health reimbursement arrangement (as defined in section
9831(d)(2) of the Internal Revenue Code of 1986).''.
(3) Effective date.--The amendments made by this subsection
shall apply to months beginning after the date of the enactment
of this Act.
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