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A national organization that represents entrepreneurs applauded President Trump’s executive order, which aims to expand more affordable and competitive health coverage choices for small business owners, their employees and the self-employed.  Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan said that these “common sense” changes, once implemented, could have a real impact on relieving entrepreneurs from the crushing health coverage costs and limited choices they are now facing.

“The Executive Order signed by President Trump will help bring smart reforms and modify intrusive and unnecessary restrictions that are driving health coverage choices higher and limiting access to coverage choices.  The various measures in the executive order address the different needs of entrepreneurs and small business owners, and we especially applaud efforts to expand health reimbursement accounts (HRAs) and allow for short-term insurance.  These measures can provide more flexibility, and directly empower entrepreneurs and individuals in their health care decision-making based on their financial resources and health coverage needs.  Allowing for association health plans will also open up the market and bring needed competition,” said Kerrigan.     

HRAs are a flexible benefit option that allows small business owners to reimburse employees tax free for out-of-pocket medical costs, including health insurance premiums. A key feature of an HRA is that they do not require the business owner to purchase a group health plan nor require any contribution from employees out of their paycheck. Thus, business owners unable to provide health insurance as a benefit to their workers due to affordability and those with lower wage staff that cannot afford to set aside funds, can utilize an HRA to offer some financial assistance to their employees for their health costs.  Unfortunately, like Cafeteria plans, business owners cannot participate in their own HRA.  This is absurd and counterproductive, and is a barrier to use and adoption. In addition to supporting measures that allow more flexibility in how HRAs are used, SBE Council will also be working to allow business owner participation in HRAs.

“HRAs are a really smart choice for health coverage, but small business owners want a more flexible option that covers the entire workforce, and that would include the owner,” added Kerrigan.

With respect to short-term limited duration insurance (STLDI), SBE Council agrees with the Administration that they play a vital role when people need coverage during career and work changes.  People will increasingly cycle between full-time jobs and “gig” work, and short-term health insurance can help fill coverage gaps.   It is forecasted that by 2027, more than half of the workforce will have been or will be independent contractors.

“Short-term and limited duration insurance aligns with trends in the labor marketplace.  Our regulatory systems need to allow for how people currently work, and how they will work.  As they cycle between full-time jobs and gig work, more affordable and flexible health coverage is desirable. This is a vital option for startups and the newly self-employed,” Kerrigan observed.