T-4 to Austerity

Obamacare haters are on the verge of finally having some success in stopping the implementation of the healthcare reform.  If the sequester’s automatic budget cuts go into effect this Friday, federal spending on three of the components of teh Affordable Care Act will be impacted.

Less money will be available for establishing the health insurance marketplaces (exchanges).  State entities trying to establish CO-OP health insurance plans will see less money.  And small business tax credits for offering health insurance will be cut.

But, of course, to achieve this slim success against Obamacare, the opponents have to be willing to put the brakes on the whole economy.  

Real Obamacare small business story

Today’s blog finishes up a week of my comments about Obamacare.  To end the week, I’m featuring one small business owner who shares my appreciation of the healthcare reform and what it has done and will do for small businesses. 

Unlike the small business that contacted me yesterday asking to be removed from the S.C. Small Business Chamber’s membership “due to the positions taken by the organization”, Betsy Burton writes about how the health insurance tax credits under Obamacare stopped her from closing her bookstore. 

As we wait the Supreme Court’s ruling possibly as early as this coming Monday, we should be listening to real life small business owners like Ms. Burton who have actual experience with Obamacare.

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Bloomberg Businessweek
June 6, 2012

This Bookstore Owner Isn't Bashing Health-Care Tax Credits

By Betsy Burton

The airwaves have been buzzing lately over whether the small business health insurance tax credit is all it’s cracked up to be. But here’s a question: When is free money not all it’s cracked up to be? Maybe when that money is made possible by a health-care reform law that some politicos are waging an ideological war against.

Encompassing many measures that positively affect millions of people, the Affordable Care Act helps small business owners like me better afford health coverage for our families and our employees. As the mother of a son who needs ongoing medical care due to a preexisting condition, and as an entrepreneur who takes pride in offering employer-sponsored health insurance to the eight employees who qualify and to their families, I am doubly thankful for the law.

By taking advantage of the reform law’s health insurance tax credit, my Salt Lake City business saved $11,000 on our premium contributions in 2010 and slightly less in 2011 since two insured employees moved away. The savings afforded by the tax credit both years has allowed me to continue offering benefits to deserving employees who’ve been with me for years at the King’s English Bookshop. We’ve recently added an employee and expect our tax credit to grow again—especially in 2014, when it increases to 50 percent.

Just a few years ago, our health-care premiums grew so high (well more than $70,000 a year, an amount that increased our payroll to an unsustainable 30 percent of our gross) that I seriously considered closing up shop. Bookstores are at a competitive disadvantage with the Internet right now, and after 35 years in business it would have been a shame if we were forced out the way so many booksellers already have been. Our health-care savings have put those worries on hold. We have other worries, of course, Internet sales chief among them, but with the support of our community and our staff, an active event calendar (authors, who support independent booksellers, visit from all over the country), and our growing technological abilities, we are surviving.

That’s why I’m so surprised—and disappointed—by all the negativity surrounding the tax credit. The economy is still on shaky ground, and I know I’m not the only one struggling to turn a profit. Because I fit so exactly into the parameters of the act, I qualified for more money than some others are getting back, but I still believe any business owner would welcome extra cash. There’s also been a lot of hubbub over the complexity of claiming the credit, but our accountant told me she didn’t have trouble with it.

In fact, it was through my accountant that I first heard about this opportunity. Like any thorough professional working to help businesses and other customers save money, she checks frequently for new developments in the tax world. Last year, the health-care credit was one of them. Able to calculate our savings without difficulty, she charged no extra fee for doing so. Tax laws change every year, and as far as I’m concerned, it’s an accountant’s job to keep up with those changes. The tax credit is no different.

Except for the fact that it carries political weight—right now, especially. With the Supreme Court set to decide the Affordable Care Act’s fate this month, opponents are using every opportunity to aim at its moving parts. There’s so much misinformation circulating about the legislation in general, and unfortunately, some of it is even coming from people who claim to represent the interests of small business.

But I’m a real small business owner, and I can tell you that one of my biggest interests is maintaining a healthy bottom line. The Affordable Care Act is helping me do that. By spreading the word, I hope I can encourage even more entrepreneurs to find out if they’re eligible for the kind of relief I received. I’m a member of the advocacy group Small Business Majority, and I saw a January 2011 survey it commissioned that showed more than half of the 619 small business owners who responded had never even heard of the health-care tax credit. Considering this, along with efforts by some of the law’s opponents to discourage small employers from looking into its benefits, the lack of uptake being blown up in the media isn’t entirely surprising.

Again, I strongly encourage all my fellow small employers to look into the credit—or at least ask their accountants to. It’s not a waste of time. Take my word for it as an entrepreneur with more than three decades of experience who puts business before politics.

http://mobile.businessweek.com/articles/2012-06-06/this-bookstore-owner-isnt-bashing-healthcare-tax-credits

Obamacare achieving its goal, slowly but surely

Small business owners are optimistic about their future says a recently released Bank of America survey.  That’s the good news.  The bad news is that small business owners are concerned about losing qualified employees to larger businesses because of benefits. 

According to the survey 18% said that providing competitive healthcare and retirement benefits is their number 1 challenge to keeping good employees.  Yet only 44% of the small businesses offered benefit packages. 

The obvious reason for small business owners not to offer healthcare and retirement programs is cost.  Reducing the cost of health insurance for small businesses was our goal for supporting national healthcare reform.  One of the provisions in Obamacare (Affordable Care Act) to reduce the costs was the health insurance tax credits.

Businesses with fewer than 25 employees, average employee pay of less than $50,000 and the employer paying at least 50% of the premiums qualified for the tax credits.  In 2010, 228,000 small business owners claimed the tax credits (up to 35% of the premium paid by the employer) and the White House gives a low-ball estimate of 360,000 taking advantage of the tax credits in 2011.  The actual number for 2011 will end up much higher since small businesses often file for tax deadline extensions, amend their taxes later or take the credits in subsequent years. 

Should more small businesses be using the healthcare tax credits?  Of course.  There are millions of small businesses that are eligible as pointed out by the Government Accountability Office yesterday when it criticized the healthcare law saying the tax credits were too small to encourage employers to offer health insurance.

But the health care tax credits in Obamacare are only one of the features that will make small business health insurance more affordable.  There’s also the requirement that at least 85% of the premiums be used for medical costs or rebates are due.  Small business owners will receive $377 million in these rebates this year because of this medical loss ratio provision.

There are many other benefits for small businesses in Obamacare that will result in keeping down or reducing premiums which I outlined back in April in an opinion editorial in The Hill.

But the GAO report not surprisingly spawned attacks by Obmacare critics.  After the report was released, a joint statement by House Small Business Committee Chairman Sam Graves and Sen. Olympia Snowe said “the healthcare reform law is simply bad policy that is holding small businesses back and therefore should be repealed.”  The statement continued, “this GAO report confirms that many small firms haven’t claimed the tax credit because it is too complex and its temporary nature didn’t provide a significant solution to their long term compliance problems — a regrettable, but all too foreseeable conclusion.”

Senator Orrin Hatch also jumped on calling Obamacare, “confusing, expensive, and burdensome for the families and businesses that have to comply with it.”

But the GAO report said that the tax credits are too small, not that they were confusing, complex, temporary, burdensome or holding anyone back.  The critics are making those complaints up. 

My CPA told me that the tax credits are actually much easier to calculate than other government tax credit programs.  And the healthcare tax credits certainly aren’t a burden or expensive for small businesses whether they use them or not. 

What the GAO report actually means is that the tax credits should be higher in order to encourage more small businesses to offer healthcare.  But one thing cannot be denied.  These tax credits under Obamacare have in fact already made health insurance more affordable for hundreds of thousands of small businesses.  That was the goal. 

Small business saving money on health care

There are at least 228,000 small business owners in the country happy about “Obamacare”.  That is the numbers who have so far claimed the health insurance tax credit for small businesses that offer the benefit to their employees for 2010. 

How much did these businesses save?  $278 million.

Unfortunately, the number of small businesses helped is lower than expected and the IRS plans to find out why.  It could be a lack of awareness, tax professionals not pursuing the credits, business data not readily available or some other barrier. 

Or it could be that the opponents of healthcare reform have poisoned the water so badly that many small business owners won’t drink it even it is beneficial to them. 

It’s a self-fulfilling prophesy for the likes of the NFIB.  They blanket the media and their members with how bad healthcare reform is so that small business owners are convinced that they should stay away from it.  Then when not more small business owners take advantage of the tax credits the NFIB can say “we told you so—Obamacare isn’t good for small business. “

Now all the NFIB has to do is convince the 228,000 and growing number of small business owners that the more affordable health insurance that they’re getting is actually bad for them.  Good luck.

SC GOP House members attack small businesses

In case you missed Wednesday afternoon’s vote in the U.S. House of Representatives, all five of our Republican members cast a vote that would result in either small businesses losing health insurance tax credits or forcing them to change health insurance plans.  H.R. 3 passed largely along party lines.

All of these elected leaders—Joe Wilson, Tim Scott, Jeff Duncan, Trey Gowdy and Mick Mulvaney—were made aware of the potential negative impact of H.R. 3 on small businesses. A letter from The South Carolina Small Business Chamber opposing the bill was widely circulated.

Before the vote I participated in a press conference in front of the Capitol with Representatives Jan Schakowsky (D-IL) and Judy Chu (D-CA) calling on the House to stop the direct attack on small businesses. Rep. Schakowsky even read excerpts of my comments on the House floor during the debate.

Our Republican House members have some “splaining” to do. After you read my comments below, call their offices and let them know that you won’t forget how they put partisan politics above the interests of their small business constituents.

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Frank Knapp, President and CEO, South Carolina Small Business Chamber of Commerce – Statement at Press Conference in Opposition to HR 3, 5/4/2011

A story yesterday in LifeSiteNews.Com said that H.R. 3 can have a historic impact on the future of the pro-life movement.

But what H.R. 3 really is – is an attempt to roll-back the historic small business health insurance tax credits created by the Affordable Care Act.

When the House voted to eliminate and defund the entire Affordable Care Act earlier this year, we could rationalize that this great benefit for small business was just collateral damage.

After all, everybody likes making health insurance more affordable for small businesses through tax credits.

Even my congressman, Joe Wilson, told me that he would support the small business health insurance tax credits in the Affordable Care Act replacement legislation.

But small businesses can no longer think of themselves as collateral damage in the efforts to kill the Affordable Care Act.

H.R. 3 is a direct attack on small business.

Even supporters of the bill have no response to our criticism that H.R. 3 is a “slap in the face to millions of small businesses now offering health insurance to employees and eligible for the new tax credits”.

Instead, as reported in the LifeSiteNews.Com story, they just change the subject and talk about H.R. 3 being tax neutral.

Not to small business it’s not. For many it will be a tax increase and for all small businesses wanting to receive the tax credits, H.R. 3 will increase their costs.

Should H.R. 3 become law, small business owners who want the health insurance tax credits will face a difficult situation:

1. Small businesses will have to take considerable time to learn medical terminology to try to determine if their health plans cover any service that could be considered an abortion service. I challenge members of Congress to try to do this.

2. If small business owners don’t choose to spend the tens of hours away from running their business, at great cost, they will turn to their insurance agent. Today, it is unlikely that these agents have the knowledge about every possible abortion service that might be in a policy. Once they ramp up, they will still have to sit down with the small business owner to review the policy.

3. And, if the conclusion is that a health plan does include some abortion service, the small business owner has another time consuming decision to make.

a. Take a tax increase because she wants to keep the health plan she has; or

b. Probably pay higher premiums under a new health plan because of new underwriting and new provisions that now might be required in policies.

Supporters of H.R. 3 are aware of the costs to small business. They know that H.R. 3 targets small businesses for punitive action while ignoring big businesses that also receive tax benefits from their health plans that might also include some abortion service.

So, let me make this very clear – A vote for H.R. 3 is a direct attack on small business.

Every Representative who loudly proclaims their love for small business because “we are the backbone of the economy,” now can put their vote where their mouth is – their true support for small business will be judged on their H.R. 3 vote.
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House Member Name- DC Office Phone Number

• Representative Tim Scott (R - 01) 202-225-3176

• Representative Joe Wilson (R - 02) 202-225-2452

• Representative Jeff Duncan (R - 03) 202-225-5301

• Representative Trey Gowdy (R - 04) 202-225-6030

• Representative Mick Mulvaney (R - 05) 202-225-5501

NFIB malpractice

Soon we will find out how many small businesses in the country received health insurance tax credits for 2010—a benefit under the Affordable Care Act (ACA). The Small Business Majority estimated that there are approximately 4 million businesses with 2 to 24 employees that could qualify for the tax credits if they offered health insurance last year. And reports from major insurance companies indicated that more small businesses decided to offer health insurance specifically because of the tax credits.

But instead of cheering for the small businesses that will be receiving the federal government’s help in making health insurance more affordable, the National Federation of Independent Business (NFIB) made one last minute effort last week to tell small business what a bad deal the tax credits are.

Well, at least they’re consistent. The NFIB fought very hard against national health care reform. After the ACA became law, the small-business pretender organization signed onto the states’ lawsuit trying to have the ACA declared unconstitutional.

There’s nothing new in the NFIB’s inaccurate complaints about the ACA. But, what the heck, let’s have some fun. Here are some of their bizarre accusations:

1. Relatively few will qualify for the credit. So how many small businesses does the NFIB project qualified for the tax credits? 10,000, 30,000, 100,000? No. The NFIB says up to 2 million. 2 MILLION!!! The NFIB calls 2 million small businesses “relatively few”.

2. Calculating the credit may cost more than the credit itself. Come on! The NFIB is correct that a small business should seek a professional tax preparer to apply for the tax credit. Some information needs to be gathered and proper calculations made. But my accountant told me that he was pleased that the accounting requirements were easier than calculating other business tax credits. Small businesses will be getting possibly tens of thousands of dollars in tax credits to reduce the cost of health insurance. If their tax preparer charges more than that for the service, my advice is to find some different help next year.

3. The credit is unlikely to offset insurance cost increases. The NFIB admits that health insurance premiums for small businesses were escalating before the ACA but claims that the reform will pile on extra costs. Well, according to Vincent Capozzi, senior vice president for Harvard Pilgrim, the ACA has only caused premiums to increase one percent, primarily due to the requirement that preventive services have no out-of-pocket charge. Let’s see. An increase of premiums by one percent but getting a tax credit of up to 35 percent of premiums paid. Obviously the same PR genius at the NFIB who thought 2 million small businesses were “relatively few” also failed math.

But somone at the NFIB finally felt a need to respond to critics like me who have been saying that the organization has been committing malpractice for discouraging small businesses from taking advantage of the tax credtits.  So the NFIB ends its latest trashing of the tax credits with this—in red no less:

[CAVEAT: Despite our concerns with the structure of the credit and the criticisms written above, NFIB urges any small business to consult with an accountant to determine whether filing for the credit is a good idea. If they determine that filing is beneficial, then by all means the business should file and get whatever dollars the law will offer.]

Interpretation: “All the crap we’ve fed you for over a year, never mind.”

Health insurance tax credits threatened

The opponents of health care reform are at it again. U.S. House Republicans saw their first general effort to repeal the Affordable Care Act (ACA), H.R. 2, go down in flames in the Senate. So now they are attacking a specific part of the ACA trying to undermine a popular benefit.

This week a House Subcommittee will take up H.R. 3, a bill set for priority by the Republican majority. They’re afraid that after many small businesses get sizeable tax credits for offering health insurance to their employees this year, more small business owners will realize the ACA was a good thing after all. So opponents are trying to make sure this doesn’t happen again in 2012, an election year.

The strategy is to take away the tax credits from small businesses or make the small businesses expend time, effort and, most likely, more money to keep the tax credits. Faced with more government intrusion and regulations, they hope to turn the tax credits into a liability for those who supported the ACA.

To do this they’re hiding behind the lofty goal of reducing the number of abortions. If the health insurance plan of a small business covers even one abortion related service (and most do), it would not qualify for the tax credits under H.R. 3.

Below is my letter to the Subcommittee and Committee that will take up H.R. 3. Feel free to share your thoughts with them also.

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March 28, 2011

The Honorable Dave Camp, Chairman
Committee on Ways and Means
341 Cannon House Office Building
Washington, DC 20515

The Honorable Sander Levin, Ranking Member
Committee on Ways and Means
236 Longworth House Office Building
Washington, DC 20515

The Honorable Pat Tiberi, Chairman
Subcommittee on Select Revenue Measures
113 Cannon House Office Building
Washington, DC 20515

The Honorable Richard E. Neal, Ranking Member
Subcommittee on Select Revenue Measures
2208 Rayburn House Office Building
Washington, DC 20515

Re: H.R.3

Dear Chairman Camp, Chairman Tiberi, Ranking Member Levin and Ranking Member Neal,

After decades of escalating group health insurance premiums and demands for Congressional action for relief, one year ago our smallest of businesses finally were given the opportunity for federal health insurance tax credits. Now H.R 3 threatens to erase this benefit for small businesses because it would eliminate the health insurance tax credits for any existing or new plans that provide coverage for abortion.

The problems H.R. 3 would cause for small businesses that are trying to do the right thing and offer health insurance have nothing to do with the ideological intent of this bill. Even if a small business owner were to agree with the intent, the cost in time, money and continuity of policy is very significant.

1. Small business owners do not have the expertise to closely examine healthcare plans to determine if abortion coverage is included. Such services are not labeled “abortion” but rather fall into numerous clauses in a health care policy from prescription drugs to outpatient surgery to maternity care that includes unforeseen complications. Small business owners are no more prepared to completely understand the fine print of their health insurance policies than are members of Congress.

2. Requiring a small business owner to try to understand the intricacies of their health insurance policies would require considerable time on their own or with an insurance agent (who also probably has no idea how to interpret the verbiage in the policy as it relates to abortion). Essentially H.R. 3 will cause a small employer to divert time from running the business. And if time is money, as we are all told, then H.R. 3 will be an increase in cost for small businesses offering health insurance.

3. Small businesses that finally determine that their health insurance policy does in fact cover even one abortion service will be financially punished in one of two ways. Either they can keep their present policy and lose thousands of dollars in hard won tax credits or they will give up their current health plan and most likely have to pay higher premiums for a new plan. The latter will result from both re-underwriting by a new carrier and adding provisions now required in any new policy. This is especially true since the health insurance exchanges will not be in place until 2014 to increase competition for this business.

H.R. 3 is simply a slap in the face to the millions of small businesses now offering health insurance to employees and eligible for the new tax credits. Targeting small businesses for such punitive action, while ignoring big businesses that also receive tax benefits when offering health insurance, demonstrates a callous disregard for the “backbone of our economy,” as members of Congress love to proclaim about small businesses.

Sincerely,

Frank Knapp, Jr.
President & CEO
The South Carolina Small Business Chamber of Commerce