Reid Introduces Small Business Healthcare Bill: Legislation will create tax refund for providing health insurance

Nevada RNformation, Aug 2004

Editor's Note: The opinions presented here reflect those of the candidate and do not necessarily represent the views or positions of the Nevada RNformation or of the Nevada Nurses Association

Working to cut health care costs for employers and expand insurance for employees, Senator Harry Reid introduced The Healthy Employees, Healthy Small Businesses Act (HEHSB). The legislation would establish a new federal refundable tax credit to reimburse small business employers for part of the costs of providing health insurance coverage to their employees.

"Millions of hard working American families have no health insurance and live in fear that financial ruin is just one illness away, or that a family member will need medical treatment that they simply can't afford," Senator Reid said. "Likewise, small businesses in this country are facing health care costs that are skyrocketing far beyond the rate of inflation. As much as many small business owners would like to provide health benefits to their employees, it is becoming more and more difficult for them to afford these costs. My legislation offers a solution to both of these very serious concerns."

Reid's tax credit would operate on a sliding scale, providing a large tax credit to all businesses with fewer than 50 employees, but giving the greatest tax relief to the smallest enterprises. Companies with fewer than 10 employees would be eligible to claim a credit of 50 percent of the cost of each eligible employee's policy, up to a limit of $1,500 for an individual policy or $3,400 for a family policy.

"Small business owners understand that to attract first-rate employees they need to provide first-rate benefits," Reid said. "They are committed to their workers, but with double-digit inflation in health care prices every year, whether or not to provide health insurance is simply a matter of economics."

"The tax credit would help small businesses struggling to cover their premium costs and expand the number of workers who have health insurance," Reid added.

Details of Reid's legislation follow:

Determination of the Amount of the Tax Credit

The HEHSB tax credit would operate on a sliding scale, providing a large tax credit to all businesses with fewer than 50 employees, but giving the greatest tax relief to the smallest enterprises.

Last year, the average self-only health insurance plan cost $3,383, of which the employee paid an average of $508 and the employer paid an average of $2,875. For a family policy, the average cost totaled $9,068, with the employee bearing $2,412 and the employer shouldering $6,656.

Under HEHSB, companies with fewer than ten employees would be eligible to claim a credit of 50 percent of the cost of each eligible employee's policy, up to a limit of $1,500 for a self-only policy or $3,400 for a family policy.

Companies with 25 to 50 employees would be eligible to claim a credit of 35 percent of the cost of each eligible employee's policy, up to a limit of $750 for a self-only policy or $1,700 for a family policy.

The tax credit limitations are indexed for inflation.

Employee Eligibility

An employer may claim this credit for each employee who works at least 400 hours during the applicable year and who earns at least $5,000 from the employer. An employer may not claim the credit if the employee is eligible for any other publicly-sponsored health insurance program, including Medicare or Medicaid.

Employer/Employee Premium Cost Share

In order to claim the tax credit, the employer must pay at least 75 percent of the total cost of the health insurance premium, regardless of whether it provides self-only or family coverage.

Self-Employed Individuals

If a small business owner takes advantage of any other health care tax incentive, he or she may not elect to receive benefits under this program.

Effective Date

The bill will take effect in 2005.