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
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Section 9831 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: The requirements of this chapter shall not apply to any qualified small employer health reimbursement arrangement. For purposes of this subsection— The term qualified small employer health reimbursement arrangement means an arrangement which— is described in subparagraph (B), and is offered on the same terms to all eligible employees of the eligible employer. An arrangement is described in this subparagraph if— such arrangement is funded solely by an eligible employer and no salary reduction contributions may be made under such arrangement, and such arrangement provides, after the employee provides proof of coverage to the employer, for the payment of, or reimbursement of, an eligible employee for— 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 including for— insurance (within the meaning of section 213(d)(1)(D)) purchased on the individual health insurance market, and premiums under part B of title XVIII of the Social Security Act and any medicare supplemental policy under section 1882 of such Act. 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. 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. For purposes of this subsection— 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). The term eligible employer means an employer that— is not an applicable large employer as defined in section 4980H(c)(2), and does not offer a group health plan (other than a qualified small employer health reimbursement arrangement) to any of its employees. 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). . Section 106 of such Code is amended by adding at the end the following: 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. For purposes of paragraph
(1)the applicable percentage shall be— 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, 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, 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 100 percent if the employee is covered for more than 9 months in the taxable year by the qualified small employer health reimbursement arrangement. 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— the number of the months in the taxable year for which such employee is covered by such arrangement, bears to the total number of months in the taxable year for which such employee is eligible to be covered by such arrangement. . 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: any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2)). . Section 4980I(d)(2) of such Code is amended by redesignating subparagraph
(D)as subparagraph
(E)and by inserting after subparagraph
(C)the following: 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). . Section 36B(c)(2) of such Code is amended by adding at the end the following new subparagraph: 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)). For purposes of clause (i), coverage shall be treated as affordable for a month if— 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 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. . 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: 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. . 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: 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. . 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: 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). . 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. The amendments made by this subsection shall apply to months beginning after the date of the enactment of this Act. 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: 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). . Section 601 of such Act ( 29 U.S.C. 1161 ) is amended by adding at the end the following new subsection: 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). . 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: 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). . The amendments made by this subsection shall apply to months beginning after the date of the enactment of this Act. 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: 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). 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. . 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: 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). . The amendments made by this subsection shall apply to months beginning after the date of the enactment of this Act.
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- 42 USC 300gg–91
- 42 USC 300bb–1
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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
Cite42 USC 300gg–91
Cite42 USC 300bb–1
Cites 6Cited by 0 across 0 sources