Beneath the din of the dueling Obamacare and Trumpcare plans, another health care act quietly passed Congress this past December, and new data shows it’s one of the few things Democrats and Republicans can agree on right now.
Related: 3 HSA facts employers need to know
In particular, left and right have united around one of the act’s provisions — the Small Business Healthcare Relief Act, which enables small businesses with fewer than 50 full-time employees to offer stand-alone health reimbursement arrangements (HRAs) to their staff.
At a time when small employers face few options to help their workers pay for health insurance, an HRA can be just the tonic. The funds in HRA accounts can be used by employees to offset health insurance premiums and/or pay for out-of-pocket expenses, potentially changing the health care picture for the better for millions of Americans.
The Small Business Healthcare Relief Act should be considered welcome news not only for the small business market but also for much of our country. Businesses with fewer than 50 workers employ approximately 33 million Americans, accounting for over one-quarter of all private sector jobs in the United States.
In 2013, it was ruled that account-based plans like HRAs did not meet the health plan requirements outlined in the Affordable Care Act, and the government began imposing hefty fines on businesses that provided HRAs to employees.
As a result, small employers had limited options to provide health insurance to their employees. Most small businesses lack the expertise and management and financial resources to set up and maintain a group health plan, and the ACA’s SHOP exchanges were not an effective alternative.
In fact, prior to the passage of the Small Business Healthcare Relief Act, 71 percent of firms with fewer than 50 full-time employees didn’t offer health insurance (a 10-point decrease from five years earlier), citing high costs as the No. 1 barrier.
After all, the average premium for an individual employee health insurance plan was $2,889 in 2001 ($3,886, adjusting for inflation) but had risen to $5,963 by 2015, according to the Medical Expenditure Panel Survey.
In the five months since the Small Business Healthcare Relief Act passed into law, opportunities have been opening up for small businesses to resume offering HRAs.
According to a WEX Health survey of health care industry leaders and experts at its Partner Conference in April, a quarter of respondents are currently selling the new small business HRA products. A similar percentage (28 percent) plan to start selling it during open enrollment this year. Those of us at WEX Health expect a meaningful uptick in employer adoption will begin to occur in 2018, as more business owners and employees learn about the new law.
Though WEX Health’s survey was fielded in the week before the House’s vote to pass the American Health Care Act on May 4, one-third of respondents said the current situation in D.C. is having a positive impact on their business, while nearly half (47 percent) said it is having no impact at all.
The Cures Act has both small business owners and healthcare industry experts feeling more optimistic about health care and curious about HRAs: Compared to a year ago, more than half of respondents (56 percent) to our survey are more optimistic about the consumer-directed health care market over the next two to three years.
And more than one-third reported employers want more integration across benefits with regard to consumer-directed accounts, while a quarter want more plan design innovation and flexibility (something HRAs support).
If you’re an employer, I encourage you to stay informed about these new opportunities. Ask your broker or local business group about HRA options. Talk to your employees about their health care options, especially during this period of legislative ups and downs. Small businesses remain the engine of job growth in the U.S., and their owners share many of the same hopes and needs. Taking advantage of this act and supporting millions of U.S. workers are things we can all get behind.