House Finance Committee hears bill to offer small-business tax credit to help employees afford exchange coverage

A House Finance Committee public hearing examined House Bill 2550, legislation to create a state tax credit for small employers that contribute toward employees’ individual-market health insurance premiums.

Representative Mazzocco, the bill’s prime sponsor, told the committee the measure is intended to address a recent coverage gap after enhanced federal premium tax credits expired at the end of 2025. “Hundreds of thousands of families had no choice but to go uninsured,” Mazzocco said, citing her statement that 156,000 Pennsylvanians dropped exchange coverage in 2026.

The bill would target businesses with 50 or fewer employees and use health reimbursement arrangements such as ICHRA or QSEHRA to help workers enroll in plans on the state health insurance exchange (referred to in testimony as “Penny”). Co-sponsor Representative Venkat, an emergency physician and member of the state exchange board, said the proposal would offset $1,000 per employee and noted the bill contemplates additional tax treatment so up to $5,000 would not be counted as income in some arrangements.

Alex Halper, Senior Vice President of the Pennsylvania Chamber of Business and Industry, said his organization is still vetting the concept and warned the proposal is not a “silver bullet.” Halper urged lawmakers to consider broad market effects, including whether limiting the credit to plans sold through the state exchange could constrain options for employees and how ICHRA rules interact with federal marketplace subsidies. “Under federal rules, an employee cannot utilize an ICHRA and receive government ACA marketplace subsidies,” Halper said, urging analysis of potential unintended consequences.

Dr. David Anderson, an assistant professor of health services policy and management, said evidence suggests the credit would likely increase enrollment but be inefficient because much of the value could flow to groups that would already purchase coverage. “Anything that reduces prices will lead to higher take up. Will it be efficient? Most likely no,” Anderson testified, recommending attention to where the policy’s funds would be transferred versus where they would change coverage decisions.

Representative Dallas Kephart criticized benefit mandates and argued they raise premiums and disproportionately burden small employers that cannot self-insure under ERISA, pressing witnesses on whether reducing mandates would lower costs for small firms. Both Halper and Dr. Anderson agreed richer benefit mandates tend to increase premiums and can push healthier groups toward ERISA-regulated or level-funded products.

Supporters framed HB 2550 as a politically feasible, incremental step to restore coverage for workers who lost federal premium help, while critics and witnesses urged careful analysis of efficiency, market segmentation, and interactions with federal rules and subsidies. No committee vote was taken; the hearing was held for information and discussion and the committee adjourned.