I 

113TH CONGRESS 

2D SESSION H. R. 5860 

To amend the Internal Revenue Code of 1986 to allow small businesses 

to use pre-tax dollars for assistance to employees purchasing policies 

in the individual market and except certain health reimbursement arrangements from group health plan requirements, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 11, 2014 

Mr. BOUSTANY (for himself and Mr. THOMPSON of California) introduced the 

following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow small 

businesses to use pre-tax dollars for assistance to employees purchasing policies in the individual market and except certain health reimbursement arrangements from 

group health plan requirements, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business 

5 Healthcare Relief Act of 2014’’. 


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1 SEC. 2. PERMITTING SMALL BUSINESSES TO USE PRE-TAX 

2 DOLLARS FOR ASSISTANCE TO EMPLOYEES 

3 PURCHASING POLICIES IN INDIVIDUAL MAR4 KET. 

5 (a) IN GENERAL.—Section 106 of the Internal Rev6 enue Code of 1986 is amended by adding at the end the 

7 following new subsection: 

8 ‘‘(e) PRE-TAX DOLLARS FOR QUALIFIED HEALTH

9 PLANS.— 

10 ‘‘(1) IN GENERAL.—Amounts paid by an eligi11 ble small employer on behalf of an employee of the 

12 employer for premiums for a qualified health plan 

13 (as defined in section 1301 of the Patient Protection 

14 and Affordable Care Act)— 

15 ‘‘(A) which covers the employee, employee’s 

16 spouse, or any dependent of the employee, and 

17 ‘‘(B) which is offered in the individual 

18 market within a State, 

19 shall be treated as employer-provided coverage for 

20 medical expenses under an accident or health plan 

21 and shall not be considered a group health plan for 

22 purposes of section 9815. 

23 ‘‘(2) ELIGIBLE SMALL EMPLOYER.—For pur24 poses of this subsection and subsection (f), the term 

25 ‘eligible small employer’ means an employer who— 


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1 ‘‘(A) is not an applicable large employer 

2 (as defined in section 4980H(c)(2)(A)), and 

3 ‘‘(B) does not offer its employees any 

4 group health plan other than an arrangement 

5 described in paragraph (1) or subsection (f). 

6 ‘‘(3) CERTAIN CONTROLLED GROUPS.—All em7 ployees who are treated as employed by a single em8 ployer under subsection (b), (c), or (m) of section 

9 414 shall be treated as employed by a single em10 ployer for purposes of this subsection.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by 

12 this section shall apply to taxable years beginning after 

13 December 31, 2013. 

14 SEC. 3. STANDALONE HEALTH REIMBURSEMENT ARRANGE15 MENTS. 

16 (a) IN GENERAL.—Section 106 of the Internal Rev17 enue Code is amended Code of 1986 is amended by adding 

18 at the end the following new subsection: 

19 ‘‘(f) QUALIFIED HEALTH REIMBURSEMENT AR20 RANGEMENTS.— 

21 ‘‘(1) IN GENERAL.—Amounts paid by an eligi22 ble small employer on behalf of an employee of the 

23 employer to a qualified health reimbursement ar24 rangement shall be treated as employer-provided 

25 coverage for medical expenses under an accident or 


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1 health plan and shall not be considered a group 

2 health plan for purposes of section 9815. 

3 ‘‘(2) IN GENERAL.—For purposes of this sub4 section, the term ‘qualified health reimbursement ar5 rangement’ means an arrangement— 

6 ‘‘(A) under which the employee may be re7 imbursed— 

8 ‘‘(i) for premiums for a qualified 

9 health plan (as defined in section 1301 of 

10 the Patient Protection and Affordable Care 

11 Act) which covers the employee, employee’s 

12 spouse, or any dependent of the employee, 

13 and is offered in the individual market 

14 within a State, and 

15 ‘‘(ii) for expenses incurred for medical 

16 care (as defined in section 213(d)) of the 

17 employee, the employee’s spouse, or any 

18 such dependent of the employee, 

19 ‘‘(B) which is provided by an eligible small 

20 employer, and 

21 ‘‘(C) under which contributions by the em22 ployer with respect to an employee for the tax23 able year are not in excess of the dollar amount 

24 in effect under section 125(i) for such taxable 


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1 year (200 percent of such amount in the case 

2 of family coverage). 

3 ‘‘(3) CERTAIN CONTROLLED GROUPS.—All em4 ployees who are treated as employed by a single em5 ployer under subsection (b), (c), or, (m) of section 

6 414 shall be treated as employed by a single em7 ployer for purposes of this subsection.’’. 

8 (b) EFFECTIVE DATE.—The amendment made by 

9 this section shall apply to taxable years beginning after 

10 December 31, 2013. 

11 SEC. 4. NO SUBSIDIES ALLOWED WITH RESPECT TO 

12 HEALTH PLAN ACQUIRED THROUGH PRE-TAX 

13 DOLLARS FOR QUALIFIED HEALTH PLAN OR 

14 QUALIFIED HEALTH REIMBURSEMENT AR15 RANGEMENT. 

16 (a) COORDINATION WITH PREMIUM CREDIT AND RE17 DUCED COST-SHARING.—Section 36B(c)(2)(B) of such 

18 Code is amended by adding at the end the following new 

19 clause: 

20 ‘‘(iii) PRE-TAX DOLLARS FOR A

21 QUALIFIED HEALTH PLAN AND QUALIFIED

22 HEALTH REIMBURSEMENT ARRANGE23 MENTS.—The term ‘coverage month’ shall 

24 not include any month during which an in25 dividual is covered under a qualified health 


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1 plan any premiums for which were reim2 bursed under an arrangement described in 

3 section 106(e) (relating to pre-tax dollars 

4 for a qualified health plan), or under a 

5 qualified health reimbursement arrange6 ment (as defined in section 106(f)), during 

7 a calendar year which includes such 

8 month.’’. 

9 (b) EFFECTIVE DATE.—The amendment made by 

10 this section shall apply to months beginning after Decem11 ber 31, 2013. 

12 SEC. 5. PRE-TAX DOLLARS FOR A QUALIFIED HEALTH PLAN 

13 AND QUALIFIED HEALTH REIMBURSEMENT 

14 ARRANGEMENTS EXCEPTED FROM GROUP 

15 HEALTH PLAN REQUIREMENTS. 

16 (a) IN GENERAL.—Section 9832(c)(1) of such Code 

17 is amended by redesignating subparagraph (H) as sub18 paragraph (J) and by inserting after subparagraph (G) 

19 the following new subparagraphs: 

20 ‘‘(H) An arrangement described in section 

21 106(e) (relating to pre-tax dollars for a quali22 fied health plan). 

23 ‘‘(I) Qualified health reimbursement ar24 rangement (as defined in section 106(f)).’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to plan years beginning after De3 cember 31, 2013. 

Æ 


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