Three senior members of the tax-writing House Ways & Means Committee have introduced legislation aimed at promoting use of Individual Choice Health Reimbursement Arrangements (ICHRAs) by small businesses that want to provide health insurance to their workers. The “Small Business Health Options Awareness Act” (SBHOAA) focuses on enhanced outreach and information about the availability of ICHRAs.

SBHOAA was introduced on September 18 by Reps. Beth Van Duyne (R-TX), Claudia Tenney (R-NY), and Kevin Hern (R-OK). The bill requires the Small Business Administration (SBA) to “actively disseminate information the tri-agencies (Labor, Treasury, and Health & Human Services) developed about ICHRAs.” Per the terms of the bill, SBA small business development centers, district offices, and “standard SBA communication tools (press releases, social media, website postings)” would have to engage in this outreach.

The bill’s sponsors say that “low awareness” of ICHRAs as a health insurance option “has prevented more widespread utilization.” Further, they say that their goal is to “make sure small businesses are aware of and understand ICHRAs are a flexible, tax-advantaged way for employers to help employees pay for individual health coverage.”

Generally, employers can contribute funds to ICHRAs with those funds usable by employees to pay for IRS-approved health care expenses and individual health insurance premiums. The funds contributed by the employer are pre-tax, and they are tax-free to the employees. The employer can vary the amount of the contribution by class of employee (e.g., the class can be defined by age or family size). The employees choose their health insurance coverage and pay the premiums (or the health care expenses) themselves (using ICHRA funds).

Prospects: ICHRAs are popular among Republican lawmakers, especially in the House (where enhancements to current law ICHRAs were included in the House version of the tax/spending cuts reconciliation bill. However, the Senate declined to include them in their version of the bill which was enacted into law this past July) This legislation is likely to carry minimal to no cost to the government and so has a reasonable chance for inclusion in a health legislative package that may come together prior to the end of 2025.

NAIFA Staff Contacts: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org.