Senate Bill 896 proposes the establishment of an income and franchise tax credit for small businesses that offer individual coverage health reimbursement arrangements (HRAs) to their employees. To qualify for this credit, a small business must employ fewer than 50 individuals and contribute at least $400 per covered employee to the HRA during the taxable year. The credit amount is set at $400 for each covered employee, and the HRAs must comply with federal regulations, which include requirements for employee enrollment in individual health insurance or Medicare and the option for employees to opt out of the HRA.

The bill includes several amendments and new provisions to existing statutes, specifically creating sections related to the individual coverage HRA credit and defining terms such as "claimant," "covered employee," and "qualifying small business." It also specifies that partnerships, limited liability companies, and tax-option corporations are not eligible to claim the credit directly, but their contributions will determine the credit amount that their partners or shareholders can claim. The bill aims to incentivize small businesses to provide health benefits to their employees, thereby enhancing access to healthcare coverage.