KERRIGAN IN THE HILL: Immediate Expansion of Health Coverage Choices for Small Businesses Must be a Priority
By SBE Council at 21 March, 2017, 2:26 pm
In a March 21 Op-ed column in The Hill, contributor and SBE Council president & CEO Karen Kerrigan reviews current health care reform efforts through the lens and experiences of entrepreneurs and business owners. She urges the GOP to take immediate action to expand affordable choices for small businesses. This is possible, as she writes, by allowing the self-employed, s-corps, partners and owners of small businesses to be able to take advantage of health reimbursement accounts (HRAs). Business owners can set these up for their employees, but they can’t use the arrangements themselves.
As Kerrigan notes:
HRAs are flexible and generally easy for a small business to set up and administer. The business owner can determine benefit costs, the maximum amount of annual reimbursement employees will receive, and other elements such as allowable rollovers to the next year. The reimbursements are tax-deductible for the business and tax-free to employee.
But self-employed business owners, S corporation owners and partnerships are not eligible to participate in HRAs. This inequity negatively impacts millions of business owners and their employees. Small business owners can establish HRAs for their employees, yet they cannot participate themselves. (Unless they have a spouse who legitimately works for the firm as a W-2 employee and the policy is in his or her name.)
It doesn’t make sense to restrict the business owner’s access to this practical benefit. Ironically, HRAs come with non-discriminatory rules that basically state that the benefits must apply to all full-time employees — except, of course, the business owner cannot participate.
Kerrigan concludes the piece by observing that bringing real competitive choices to the marketplace will take time during the transition from Obamacare repeal to the new regulatory framework. That is why exapnding what works – like HRAs – is especially important for small businesses during this lag period.