Bernard DiFiore's blog

In a press release issued today (December 16, 2011), the U.S. Department of Health and Human Services has announced that state exchanges will now determine their benchmark for essential benefits based upon use of the most popular plans in their region and the ten benefit categories of care that were originally defined in the health care reform regulations. This change to move the responsibility of essential benefits to the state level will give states the flexibility to match their exchange plans to be equal to those offered by a typical employer in the state. Further, those states that have a broader based health care coverage mandate will not be penalized for incorporating their states mandates into their definition of essential benefits.

One of the more positive aspects of the Patient Protection and Affordable Care Act (PPACA) was the authorization of a federal tax credit for small business owners who offer health insurance benefits to their employees. This tax credit potentially is worth a great deal of money to small business employers. Despite the potential for significant cost savings, efforts to promote the Small Business Health Care Tax Credit to small businesses have missed the mark.

According to a recent report by the Inspector General of the U.S. Department of Treasury, a relatively small number of eligible businesses are taking advantage of the offered tax credit. Although the Treasury Department predicted approximately $2 billion dollars in small business health care tax credits generated by the estimated 4.4 million eligible small employers for 2010,[1] the tax credit has only generated $278 million dollars in tax credits.[2] The report lists the reasons so few small employers have taken advantage of this tax credit, including:

• The credit for Small Employer Health Insurance Premiums is based upon very complex legislation and regulations that are hard to understand.
• Form 8941 does not contain all of the data and calculations needed to verify each step of tax credit eligibility and calculation.
• The calculations to identify the tax credit are complicated.
• The penalty for inadvertently claiming a false tax credit is significant.

While the Treasury Department responded to the Inspector General’s report by listing the outreach mechanisms that have been employed to date, it missed the most important reason that so few small businesses are accessing the tax credit – failure to reach out to the health insurance Broker community. When it comes to talking about health insurance credits, no single group of professionals has greater access to small business employers on health insurance issues than the Broker community. The owners of small businesses rely on their Brokers to help them navigate the complex intricacies of providing health insurance to their employees. Despite spending $29 million in outreach efforts, it’s not nearly as effective as a Broker talking with his clients about the opportunities this tax credit presents.

We applaud the recent efforts of the Treasury Department to reach out to the broker community through associations such as NAHU, and urge our Brokers to communicate this important tax credit opportunity to their clients.     

We have written about this important tax credit before. For more information on the details of this tax credit, please click here.

BenefitMall will endeavor to keep you up-to-date as this issue develops. In the meantime, visit www.benefitmall.com to view past Legislative Alerts in the “Newsroom” section. Or, you may visit www.HealthcareExchange.com for blog posts, polls, surveys and numerous resources. If you have any questions, please contact your local BenefitMall sales team and they will be happy to assist you.

The views expressed in this legislative alert do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

In a recent post, we discussed how challenging it can be for consumers to grasp the many changes to health insurance under the Patient Protection and Affordable Care Act (PPACA). Employers also face many of the same challenges, but with the added mandate to comply with new federal and state requirements as an outgrowth of health care reform initiatives being implemented in a struggling U.S. economy.   

Some of the key questions public policymakers are asking include:

Over the summer, Congress will likely take a more incremental approach to addressing any amendments to the Patient Protection and Affordable Care Act (PPACA).[1] After the House sent a shock wave of “repeal” earlier in the year, things appear to be cooling down a little with the new mantra of “repair.”