Unfair IRS Rule Going Into Effect Today Would Have “Devastating Effects” on America’s Small Businesses


Unfair IRS Rule Going Into Effect Today Would Have “Devastating Effects” on America’s Small Businesses

brad@lunaeisenlamedia.com | 202-812-8140 (mobile)

In Light of Bipartisan Legislation Introduced in Congress, NASE Calls on Treasury to Immediately Delay Rule Until End of the Year

– A new Internal Revenue Service (IRS) policy imposing a $100 a day fine per employee on small businesses that offer traditional health reimbursement accounts (HRAs) goes into effect today and the consequences could be crippling for America’s smallest employers. 

The National Association for the Self-Employed (NASE), the nation’s leading advocate and resource for the self-employed and micro-business community, is calling on the U.S. Treasury Department to immediately delay the policy until the end of the year in order for bipartisan legislation to passed through Congress to remedy the situation.

“Currently in Congress bipartisan legislation has been introduced that would fix this unintended consequence of the Affordable Care Act,” said Katie Vlietstra, NASE’s Vice President for Government Relations and Public Affairs.  “The Treasury Department should immediately announce a delay in this rule until the end of the year in order for the legislative process to work and for small businesses to be spared the devastating effects this IRS rule could have across America’s Main Street.”

In February, the U.S. Department of the Treasury’s announced a delay in the enforcement of the technical guidance issued in September 2013 regarding Health Reimbursement Arrangements (HRAs), a key health care tool for America’s smallest employers.  The February delay expires today and fines could begin to be imposed on businesses not meeting the requirement for group coverage plans that provide health care assistance for their employees through the use of traditional HRA accounts. 

The bipartisan Small Business Healthcare Relief Act introduced last week in Congress by Reps. Charles Boustany (R-La.) and Mike Thompson (D-Calif.) in the U.S. House and Sens. Charles Grassley (R-Iowa) and Heidi Heitkamp (D-N.D.) in the U.S. Senate would provide a remedy to this situation by enabling small businesses to continue to use Health Reimbursement Arrangements (HRAs), which allow employers to provide pre-tax dollars to employees to pay for medical care and services.

Vliestra concluded, ““Health Reimbursement Accounts have historically been a very powerful and effective tool for the small business community.  HRA’s allows small business owners to do the right thing by helping provide financial assistance to their employees for qualified health care expenses.  Which should be applauding them for wanting to help their employees access affordable health care coverage, not punish them with arbitrary IRS policies that could cripple their business.”

When the technical guidance was originally issued back in 2014, NASE provided comment on the guidance stating that, “the technical guidance misinterprets the intent of the ACA as it relates to these types of tools (HRAs) used to provide financial support to employers with less than 50 employees.”


The National Association for the Self-Employed (NASE) is the nation's leading resource for the self-employed and micro-businesses, bringing a broad range of benefits to help entrepreneurs succeed and to drive the continued growth of this vital segment of the American economy. The NASE Small Business Locator helps identify and connect our nation’s smallest businesses. In addition, NASE’s new health care portal helps small business owners navigate the nation’s health care marketplace. The NASE is a 501(c) (6) nonprofit organization and provides big-business advantages to hundreds of thousands of micro-businesses across the United States. For more information, visit the association's website at NASE.org

Courtesy of NASE.org