Inslee visits Redmond, talks health care, tax credits for small businesses

U.S. Congressman Jay Inslee, who represents District 1 in Washington, hosted an informal discussion about the new health care reform law and tax credit opportunities available to small businesses on July 7 at the Redmond Regional Library.

U.S. Congressman Jay Inslee

U.S. Congressman Jay Inslee, who represents District 1 in Washington, hosted an informal discussion about the new health care reform law and tax credit opportunities available to small businesses on July 7 at the Redmond Regional Library.

Representatives of the U.S. Small Business Administration (SBA), Internal Revenue Service (IRS) and U.S. Department of Health and Human Services (HHS) also brought information to the meeting.

Inslee broke the ice by calling Redmond “home of the ultimate small business.” At least, “Microsoft started small,” he quipped.

But as much as large corporations contribute to the local, regional and state economy, “we recognize how critical small businesses are to job creation,” Inslee stated.

Small business owners pay 18-20 percent more in health insurance premiums than large businesses, he noted.

“I love Microsoft, love Boeing — they’re doing great things, but job creation is number one … I want to keep Americans healthy and keep them employed,” said Inslee.

To encourage small businesses to offer health insurance, thus attracting and retaining good employees, small businesses are now eligible for new tax credits to offset up to 35 percent of the premiums a small business pays to cover its workers. In 2014, the rate will increase to 50 percent.

Inslee cited a scenario that would be typical in a community such as Redmond. An auto repair shop with 10 employees, paying out $250,000 in total wages or $25,000 per worker, could have employee health care costs of $70,000. The owner would receive a 2010 Tax Credit of $24,500 (35 percent credit) or a 2014 Tax Credit of $35,000 (50 percent credit) for providing health benefits.

To be eligible for the Small Business Health Care Tax Credit,

• A qualifying employer must cover at least 50 percent of health care coverage for some of its workers based on the single rate.

• A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).

• A qualifying employer must pay average annual wages below $50,000.

• Both taxable (for profit) and tax-exempt firms qualify.

• The credit is worth up to 35 percent of a small business’ premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employees).

• The credit phases out gradually for firms with average wages between $25,000 and $50,00 and for firms with the equivalent of between 10 and 25 full-time workers.

To determine if you qualify for the Small Business Health Care Tax Credit, follow three steps at this IRS Web site: http://www.irs.gov/pub/irs-utl/3_simple_steps.pdf

Also, HHS has created a new Web portal to help individuals, families or employers find the best, most affordable, private or public health care plans for their needs. To learn more, visit www.healthcare.gov.

Another change coming up in 2014 is that small businesses with generally fewer than 100 employees will be able to shop in an exchange program which will give them power similar to what large businesses have, to get better health insurance choices and lower prices.

“We hope small business people will be able to have more transparency in the market,” said Inslee. “There will be an options exchange showing all the quotes out there, which will help drive the costs down, in 2014.”

This will help both employers and consumers to “buy quality rather than quantity,” Inslee remarked.

Better coverage for preventive care will also be a boon for both employers and employees, he said. Early detection and treatment for conditions such as diabetes, heart disease or cancer lowers medical costs in the long run and increases workers’ productivity.

“Primary care givers will be better compensated — and they are small business people, too,” Inslee added.

As well, for those small businesses with workers who’ve been uninsured for several months or denied a policy based on “pre-existing conditions,” a high risk pool will immediately offer insurance and assistance to help pay the premiums.

Summarizing the theme of Inslee’s meeting, Julie McFarlane, deputy district director for the SBA, remarked, “American small business has asked for more affordable insurance. They’ve been paying more, about 18 percent more, for premiums than large businesses. Many people stay at large businesses because they need or want the insurance benefits. Helping small businesses will promote entrepreneurship, help small businesses have less cost, ramp up, get better employees and stimulate economic growth.”

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