Small businesses and individual taxpayers in America face many challenges when it comes to accessing affordable and quality health care. The innovative CHOICE Arrangement Act, assembled by the House Ways and Means Committee and the House Education and Workforce Committee, will lower health care costs and improve flexibility for a huge swath of American workers. We applaud House Ways and Means Chair Jason Smith (R-MO) and House Education and Workforce Chair Virginia Foxx (R-NC) for their leadership and urge the immediate passage of this legislation to drive down health care costs for taxpayers nationwide.
The bill addresses health care costs through several innovative methods. One of the primary components focuses on health reimbursement arrangements (HRAs), which allow employers to reimburse their employees for health care and medical expenses, such as medical devices, drugs, premiums, deductibles, and copays.
However, current statute and past rules limit the flexibility and usability of HRAs, making them less beneficial for both employers and employees. For example, under old rulemaking, most employers cannot offer HRAs to employees who are eligible for group health plans, and most employees cannot use HRAs to purchase individual health insurance plans on the open market. This could be subject to change at any time since it is not codified under the law.
This bill would also codify Trump-era regulation that expands and enhances HRAs for small businesses and workers. In particular, it expands eligibility for companies to offer tax-exempt contributions to employees to pay for health care premiums or qualified medical expenses. This change would enhance the portability of health benefits for many workers.
In addition, the bill amends Employee Retirement Income Security Act (ERISA) regulations to allow for the formation of Association Health Plans (AHPs) across state lines. AHPs are groups of similar individuals or businesses that seek to leverage their collective buying power to either self-fund or purchase their own health coverage. A Trump-era rule that allowed these formations across state lines using ERISA preemption is still in legal limbo, which jeopardizes the growth and future stability of AHPs. Codifying the Trump-era rule into the law will serve to promote and create more choices and more affordable health care solutions for small businesses.
Finally, the bill includes a technical change to ERISA that would effectively preempt states from imposing restrictions on stop-loss policies used by self-funding health plans. Self-funded plans are an alternative to other group health plans that use a large carrier to underwrite their population risk. These self-funded plans depend on the employer to assume the financial risk of providing benefits. Stop-loss policies are insurance contracts that kick in when medical coverage payouts to beneficiaries reach a pre-determined/catastrophic level. These policies ensure the financial stability of both the self-funded health plan and the plan sponsor (employer/business).
This legislation would provide more options and flexibility for small businesses and workers to access health care that suits their needs and preferences. It would also reduce administrative burdens and costs for employers, and increase competition and innovation in the health insurance market.
The CHOICE Arrangement Act is a package of common-sense solutions that would benefit millions of Americans who are struggling with rising health care costs and limited choices.
National Taxpayers Union urges all members of the House to vote “Yes” on the immediate passage of H.R. 3799, the CHOICE Arrangement Act. It will also be included as a significant vote on the annual NTU Rates Congress scorecard.