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Craig Whitney, Published July 10 2010

Now that the health care bill is law ...

The Fargo Moorhead Chamber of Commerce recently held a panel discussion regarding health care reform and its effect on businesses of all sizes. The common theme throughout the forum was that there are good things in the Patient Protection and Affordable Care Act, as well as things that concern us as small-business advocates.

On the positive side, the bill includes provisions that may allow North Dakota employers to offer health insurance to employees for the first time. It also offers tax credits for small employers who pay at least half of their employees’ health insurance premiums.

It’s important to note that the small-employer tax credit expires.

The credit for small business is subject to a “sunset clause” and will be phased out based on number of employees and average wages. Beginning in 2014, the credit is available only for two years, so an employer could qualify for the credit for a total of six taxable years if they began this year. And as of 2014, the tax credit for the final two years requires a small- business owner to drop existing group coverage and purchase coverage through the future health exchange.

The purpose of that tax credit is only to offset actual tax liability. And, the fact it’s a tax credit means employers must have the cash flow to pay premiums up front and apply for the credit on their tax returns after the fact.

Another concern around the tax credit is for the self-employed. That group represents 78 percent of all small businesses in the United States, yet they won’t be able to claim the small-employer credit.

The prediction: Premiums will go up.

As we heard from multiple sources last week, while there are credits to offset insurance expenses, there are also provisions in the law that will definitely drive increases in insurance premiums.

For example, the definition of “essential benefits” is not yet determined. Employers who already offer health insurance to employees may be required to carry richer benefit plans than they offer today. The increased cost for richer benefit packages, together with a tax on the health industry – coupled with the fact your insurer now pays taxes on premiums they collect – are all destined to make premiums to increase.

The Fargo Moorhead Chamber and the U.S. Chamber are supplying information to employers of all sizes as they strive to understand and comply with this new legislation. The U.S. Chamber publication, “Critical Employer Issues,” as well as presentations from the Chamber event are available on our website: http://fm.chamberview.com/healthcarereform.


Whitney is president and CEO, Fargo Moorhead Chamber of Commerce.