The ACA small business tax credit: Build the bridge wider, don't blow it up


We’re incorporated as a non-profit, under a special category for resource conservation, but 85 percent of our income comes from business operations. When we started in 2003, my co-founder and I were the only people on payroll. Now, we employ 15 to 20 people.
At Home ReSource, we believe our employees work best when they’re healthy. We also know health benefits are key to attracting and retaining great employees. We’ve offered health insurance to full-time employees since 2004, and we pay 100 percent of the premiums.
Skyrocketing costs have made this difficult to sustain. We’ve faced double digit increases practically every year, as high as 39 percent. We’ve had to shop for a new plan almost every year, increase our deductibles and reduce benefits.
We now have a $5,200 deductible. It’s the kind of insurance that works fine until something goes wrong – as I can attest to personally from an emergency hospital stay that left me with bills totaling around $4,000. I had just barely achieved the “American Dream” of home ownership a few years before; these bills forced me to sell my home.
In the past year, the ACA has changed our situation at Home ReSource significantly – for the better. This is thanks to the small business tax credit and also to other parts of the health law.
In 2010, we paid close to $11,000 for employees’ health insurance. The tax credit cut our costs by over $2,000. For a small business struggling to keep health coverage, that makes all the difference. We were actually considering dropping our insurance, but the tax credit tipped the balance and helped us maintain coverage.
I found the credit pretty straightforward. I prepared the worksheet myself to determine if we qualified and it took me less than 10 minutes. Our accountants spent a little over an hour preparing the final forms, at a cost of $195 to Home ReSource.
So, we spent 10 minutes and $195 to get more than $2,000 back. A small business can’t ask for a better return on investment than that.
According to numbers presented at today’s hearing, utilization of this credit is lower than expected. If that is the case, I’d strongly encourage Congress to build on this credit and help more businesses benefit. This could be done simply by raising the employee and average wage thresholds for qualifying businesses.
Since the Congressional Budget Office scored this tax credit at $38 billion, I believe Congress should make sure all of these resources are getting to small businesses to help us with our health care costs.
Of course, there’s more to the health reform law than this tax credit. We’re also benefiting from other parts of the law.
There’s the requirement that insurers cover preventive care. There’s the end to denying coverage for kids with pre-existing conditions - I lost one of my best employees before this provision went into effect because our insurer wouldn’t cover his kid who was a cancer survivor with Down Syndrome.
And, after years of steep increases – between 19 and 39 percent a year – this year’s increase was only 9 percent. Combine this with the tax credit and we’ll see our effective health insurance costs go down by double digits this year.
I see the ACA’s small business tax credit as a bridge to a reformed insurance marketplace in 2014. If not enough businesses are making it across the bridge, let’s build the bridge wider, not blow it up.
Matt Hisel co-directs Home ReSource, a building materials reuse center he co-founded in 2003 in Missoula, Montana. He has served on various city advisory boards in Missoula and on the steering committee of the Montana Small Business Alliance.

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