[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5447 Engrossed in House (EH)]
<DOC>
114th CONGRESS
2d Session
H. R. 5447
_______________________________________________________________________
AN ACT
To provide an exception from certain group health plan requirements for
qualified small employer health reimbursement arrangements.
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 Health Care Relief
Act of 2016''.
SEC. 2. EXCEPTION FROM GROUP HEALTH PLAN REQUIREMENTS FOR QUALIFIED
SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENTS.
(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) Exception for Qualified Small Employer Health Reimbursement
Arrangements.--
``(1) In general.--For purposes of this title (except as
provided in section 4980I(f)(4) and notwithstanding any other
provision of this title), the term `group health plan' shall
not include 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 provided 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,
``(ii) such arrangement provides, after the
employee provides proof of coverage, for the
payment of, or reimbursement of, an eligible
employee for expenses for medical care (as
defined in section 213(d)) incurred by the
eligible employee or the eligible employee's
family members (as determined under the terms
of the arrangement), and
``(iii) the amount of payments and
reimbursements described in clause (ii) for any
year do not exceed $5,130 ($10,260 in the case
of an arrangement that also provides for
payments or reimbursements for family members
of the employee).
``(C) Certain variation permitted.--For purposes of
subparagraph (A)(ii), an arrangement shall not fail to
be treated as provided on the same terms to each
eligible employee merely because the employee's
permitted benefits under such arrangement vary in
accordance with the variation in the price of an
insurance policy in the relevant individual health
insurance market based on--
``(i) the age of the eligible employee
(and, in the case of an arrangement which
covers medical expenses of the eligible
employee's family members, the age of such
family members), or
``(ii) the number of family members of the
eligible employee the medical expenses of which
are covered under such arrangement.
The variation permitted under the preceding sentence
shall be determined by reference to the same insurance
policy with respect to all eligible employees.
``(D) Rules relating to maximum dollar
limitation.--
``(i) Amount prorated in certain cases.--In
the case of an individual who is not covered by
an arrangement for the entire year, the
limitation under subparagraph (A)(iii) for such
year shall be an amount which bears the same
ratio to the amount which would (but for this
clause) be in effect for such individual for
such year under subparagraph (A)(iii) as the
number of months for which such individual is
covered by the arrangement for such year bears
to 12.
``(ii) Inflation adjustment.--In the case
of any year beginning after 2016, each of the
dollar amounts in subparagraph (A)(iii) shall
be increased by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for the calendar year in which
the taxable year begins, determined by
substituting `calendar year 2015' for
`calendar year 1992' in subparagraph
(B) thereof.
If any dollar amount increased under the
preceding sentence is not a multiple of $100,
such dollar amount shall be rounded to the next
lowest multiple of $100.
``(3) Other definitions.--For purposes of this subsection--
``(A) Eligible employee.--The term `eligible
employee' means any employee of an eligible 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
to any of its employees.
``(C) Permitted benefit.--The term `permitted
benefit' means, with respect to any eligible employee,
the maximum dollar amount of payments and
reimbursements which may be made under the terms of the
qualified small employer health reimbursement
arrangement for the year with respect to such employee.
``(4) Notice.--
``(A) In general.--An employer funding a qualified
small employer health reimbursement arrangement for any
year shall, not later than 90 days before the beginning
of such year (or, in the case of an employee who is not
eligible to participate in the arrangement as of the
beginning of such year, the date on which such employee
is first so eligible), provide a written notice to each
eligible employee which includes the information
described in subparagraph (B).
``(B) Contents of notice.--The notice required
under subparagraph (A) shall include each of the
following:
``(i) A statement of the amount which would
be such eligible employee's permitted benefits
under the arrangement for the year.
``(ii) A statement that the eligible
employee should provide the information
described in clause (i) to any health insurance
exchange to which the employee applies for
advance payment of the premium assistance tax
credit.
``(iii) A statement that if the employee is
not covered under minimum essential coverage
for any month the employee may be subject to
tax under section 5000A for such month and
reimbursements under the arrangement may be
includible in gross income.''.
(2) Limitation on 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.--
For purposes of this section and section 105, payments or
reimbursements from a qualified small employer health reimbursement
arrangement (as defined in section 9831(d)) of an individual for
medical care (as defined in section 213(d)) shall not be treated as
paid or reimbursed under employer-provided coverage for medical
expenses under an accident or health plan if for the month in which
such medical care is provided the individual does not have minimum
essential coverage (within the meaning of section 5000A(f)).''.
(3) Coordination with health insurance premium credit.--
Section 36B(c) of such Code is amended by adding at the end the
following new paragraph:
``(4) Special rules for qualified small employer health
reimbursement arrangements.--
``(A) In general.--The term `coverage month' shall
not include any month with respect to an employee (or
any spouse or dependent of such employee) if for such
month the employee is provided a qualified small
employer health reimbursement arrangement which
constitutes affordable coverage.
``(B) Denial of double benefit.--In the case of any
employee who is provided a qualified small employer
health reimbursement arrangement for any coverage month
(determined without regard to subparagraph (A)), the
credit otherwise allowable under subsection (a) to the
taxpayer for such month shall be reduced (but not below
zero) by the amount described in subparagraph
(C)(i)(II) for such month.
``(C) Affordable coverage.--For purposes of
subparagraph (A), a qualified small employer health
reimbursement arrangement shall be treated as
constituting affordable coverage for a month if--
``(i) the excess of--
``(I) the amount that would be paid
by the employee as the premium for such
month for self-only coverage under the
second lowest cost silver plan offered
in the relevant individual health
insurance market, over
``(II) \1/12\ of the employee's
permitted benefit (as defined in
section 9831(d)(3)(C)) under such
arrangement, does not exceed--
``(ii) \1/12\ of 9.5 percent of the
employee's household income.
``(D) Qualified small employer health reimbursement
arrangement.--For purposes of this paragraph, the term
`qualified small employer health reimbursement
arrangement' has the meaning given such term by section
9831(d)(2).
``(E) Coverage for less than entire year.--In the
case of an employee who is provided a qualified small
employer health reimbursement arrangement for less than
an entire year, subparagraph (C)(i)(II) shall be
applied by substituting `the number of months during
the year for which such arrangement was provided' for
`12'.
``(F) Indexing.--In the case of plan years
beginning in any calendar year after 2014, the
Secretary shall adjust the 9.5 percent amount under
subparagraph (C)(ii) in the same manner as the
percentages are adjusted under subsection
(b)(3)(A)(ii).''.
(4) Application of excise tax on high cost employer-
sponsored health coverage.--
(A) In general.--Section 4980I(f)(4) of such Code
is amended by adding at the end the following:
``Section 9831(d)(1) shall not apply for purposes of
this section.''.
(B) Determination of cost of 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 new subparagraph:
``(D) Qualified small employer health reimbursement
arrangements.--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 coverage shall be equal to the amount described
in section 6051(a)(15).''.
(5) Enforcement of notice requirement.--Section 6652 of
such Code is amended by adding at the end the following new
subsection:
``(o) Failure To Provide Notices With Respect To Qualified Small
Employer Health Reimbursement Arrangements.--In the case of each
failure to provide a written notice as required by section 9831(d)(4),
unless it is shown that such failure is due to reasonable cause and not
willful neglect, there shall be paid, on notice and demand of the
Secretary and in the same manner as tax, by the person failing to
provide such written notice, an amount equal to $50 per employee per
incident of failure to provide such notice, but the total amount
imposed on such person for all such failures during any calendar year
shall not exceed $2,500.''.
(6) 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 permitted benefit (as defined in
section 9831(d)(3)(C)) 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.--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 amount of the
enrollee's permitted benefit (as defined in section
9831(d)(3)(C) of the Internal Revenue Code of 1986)
under a qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2) of such
Code).''.
(7) Effective dates.--
(A) In general.--Except as otherwise provided in
this paragraph, the amendments made by this subsection
shall apply to years beginning after the earlier of--
(i) the date that is 90 days after the date
of the enactment of this Act, or
(ii) December 31, 2016.
(B) Transition relief.--The relief under Treasury
Notice 2015-17 shall be treated as applying to any plan
year beginning on or before the date described in
subparagraph (A).
(C) Coordination with health insurance premium
credit.--The amendments made by paragraph (3) shall
apply to taxable years beginning after the date
described in subparagraph (A).
(D) Employee notice.--The amendments made by
paragraph (5) shall apply to notices with respect to
years beginning after the date described in
subparagraph (A).
(E) W-2 reporting.--The amendments made by
paragraph (6)(A) shall apply to calendar years
beginning after December 31, 2016.
(F) Information provided by exchange subsidy
applicants.--
(i) In general.--The amendments made by
paragraph (6)(B) shall apply to applications
for enrollment made after the date described in
subparagraph (A).
(ii) Verification.--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) Substantiation requirements.--The Secretary of the
Treasury (or his designee) may issue substantiation
requirements as necessary to carry out this subsection.
(b) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 733(a)(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1191b(a)(1))
is amended by adding at the end the following: ``Such term
shall not include 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,
etc.--Section 607(1) of such Act (29 U.S.C. 1167(1)) is amended
by adding at the end the following: ``Such term shall not
include 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 plan years beginning after the date described in
subsection (a)(7)(A).
(c) Amendments to the Public Health Service Act.--
(1) In general.--Section 2791(a)(1) of the Public Health
Service Act (42 U.S.C. 300gg-91(a)(1)) is amended by adding at
the end the following: ``Except for purposes of part C of title
XI of the Social Security Act (42 U.S.C. 1320d et seq.), such
term shall not include 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 2208(1) of the Public Health Service Act (42 U.S.C.
300bb-8(1)) is amended by adding at the end the following:
``Such term shall not include 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 plan years beginning after the date described in
subsection (a)(7)(A).
Passed the House of Representatives June 21, 2016.
Attest:
Clerk.
114th CONGRESS
2d Session
H. R. 5447
_______________________________________________________________________
AN ACT
To provide an exception from certain group health plan requirements for
qualified small employer health reimbursement arrangements.