A Race to Wrap Up the 114th Congress

Dec 2, 2016

With the 2016 legislative session drawing to a close, Congress is expected to primarily focus on legislation to fund the federal government beyond the current December 9 deadline. While final language hasn't been released yet, Congress is likely to pass a continuing resolution that would fund the government into the spring of 2017. Action on a defense authorization bill is also likely.

As it relates to health care, on Wednesday, November 30, the House of Representatives passed the 21st Century Cures Act (H.R. 34) by a 392 to 26 vote, showing a bipartisan spirit that has been rare in recent years. The Cures Act is legislation to incentivize the development of new medical treatments. The landmark legislation provides $4.8 billion for three signature Obama administration research programs over the next 10 years: Vice President Joe Biden's cancer moonshot, the BRAIN Initiative and the Precision Medicine Initiative. It would also give states $1 billion to fight the opioid crisis and deliver an additional $500 million to the FDA.

The 21st Century Cures Act includes a provision of relevance to the HR profession. The bill includes a provision that would exempt certain small employers (with one to 50 full-time employees) who operate qualified Health Reimbursement Accounts (HRAs) from the penalties imposed by the Affordable Care Act (ACA). Specifically, the Cures Act would amend the Internal Revenue Code to allow qualified HRAs to operate without penalty. Qualification of HRAs for small businesses would require the following certain limits, including:

  • Funding solely by employer contributions, with no salary reduction contributions;
  • Coverage obtained by a participating employee through an affordable ACA plan;
  • Benefits capped, in general, at $4,950 per year ($10,000) for families;
  • Proration of benefits for partial-year coverage;
  • No group health plan offered to any employee; and
  • Adherence to notification and reporting requirements.

The Cures Act retroactively extends the initial penalty relief provided to small employers, to apply to any plan year beginning on or before December 31, 2016. This specific HRA requirement for qualified small employers specified within the Cures Act would apply to years beginning after December 31, 2016.

The Cures Act will now go to the Senate, for a vote as early as next week. The measure is expected to pass the Senate. Thereafter it will go to the president's desk for signature. According to a recent White House press statement, President Obama is expected to sign the bill into law.

On the tax front, action on renewing dozens of tax breaks and benefits that either have already expired or are set to expire at midnight on December 31 may also be considered. They are known as "tax extenders"; none of the provisions expiring are HR-related. However, whenever Congress opens the "Pandora's box" of tax law, anything can happen. SHRM will be monitoring the situation should an agreement emerge to ensure that changes to workplace benefits are not included.

As for overtime, the court decision last week and yesterday's Department of Labor's appeal of that decision may afford the incoming Trump administration the opportunity to revisit the overtime regulations (see related story). SHRM believes that the current salary threshold needs to be increased, consistent with the methodology that's been used to increase the threshold historically, while meeting the needs of both employers and employees and taking into consideration the realities of the 21st century workplace.

Looking ahead to 2017, SHRM looks forward to working with the incoming presidential administration and Congress to advance effective workplace policies. SHRM will continue to provide updates and developments on legislative and regulatory proposals of relevance to the HR profession from the newly elected Trump administration and the 115th Congress convenes in January.


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