KANSAS CITY, Mo. – Not-for-profit employers can earn tax credits under the health-reform law, a small-business expert said at a Friday forum held to discuss aspects of the Affordable Care Act.
The credits would be in the form of refunds on payroll taxes paid by small nonprofits that choose to offer health coverage to their employees, said Mary Timmel, an outreach manager for the Small Business Majority, a nonprofit advocacy organization.
The maximum credit now is 25 percent but that increases to 35 percent next year.
That increased rate would be available only to organizations that purchase policies through the health insurance exchanges, or online marketplaces, that the law says are to begin operating in each state by Jan. 1, 2014.
“I think that is huge for them to know,” Timmel said of the tax credits.
About 100 nonprofit officials attended the two-hour event at the Kauffman Foundation Conference Center. Nonprofit Connect, a membership organization for nonprofits, and the REACH Healthcare Foundation put on the forum.
“Nonprofits are concerned about how (the law) is going to affect them,” said Luann Feehan, executive director of Nonprofit Connect, “for their finances, for their budgets, and especially for their employees.”
Regardless if the employer is for-profit or nonprofit, Timmel said, the tax credits only apply to firms with fewer than 25 full-time equivalent employees. Those workers must have an annual average wage of less than $50,000 and the employer must pay at least half the employees’ premium costs.
For-profit businesses are eligible for higher tax credits, she said, since nonprofits already enjoy favorable tax treatment because of their nonprofit status.
Timmel said the law exempts employers with fewer than 50 full-time-equivalent employees from penalties for not offering quality and affordable health care to their workers.
In those cases, she said, employers don’t have to change anything with regard to their health coverage. But with the tax credits, she said, “there are some benefits to operating differently than you do right now.”
According to the Small Business Majority, more than 85,000 Missouri businesses, or about 92 percent of all businesses in the state, are eligible for the small-business tax credit. In Kansas, nearly 46,000 businesses, or nearly 90 percent, qualify for the tax credit.
The figures include for-profits and nonprofits.
Nearly 30 percent of the eligible businesses in both states qualify for the maximum credit, according to the organization.
It’s good to provide health-reform information to nonprofits, said REACH President Brenda Sharpe, because officials with these organizations can disseminate it through their various contacts, which include donors and board members.
“I think anytime any business professional, whether they are nonprofit or for-profit, can learn about what is happening with healthcare is great,” Feehan said. “Education is good for people to be aware of what is coming down the pike.”
She said people at the forum told her they had gained a better understanding of how the law affects seasonal employees that work fewer than 120 hours a year.
Given that many nonprofits have fewer than 50 employees, Feehan said, it was good for the audience to hear how the law affects small businesses.
Information about the insurance exchanges also was provided at the forum.
According to the federal Health and Human Services Department, certain employers will have access to the exchanges for plans to cover their employees, generally those with “fewer than 100 employees,” according to the HHS health reform website.
Another member of the forum panel was Sheldon Weisgrau, director of the Health Reform Resource Project, an initiative of Kansas Grantmakers in Health.
He said insurance brokers and agents would be good resources for small businesses to check with in making decisions about covering employees.
“They are getting really smart about this,” Weisgrau said. “There are formulas for figuring all this stuff out and it can get pretty complicated.”