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Tuesday, March 20, 2001
Senate Majority Leader Joseph L. Bruno and Senator James L. Seward (R-C, Oneonta) today announced a plan to help small businesses afford the cost of providing health care coverage to employees through the creation of a $235 million health insurance tax credit included in the 2001-02 Senate Budget Resolution.
"The rising cost of health insurance premiums is a tremendous burden on small businesses," Senate Majority Leader Joseph L. Bruno said. "Employers are faced with the difficult decision of whether to shift more of the insurance cost to employees or drop health care coverage entirely. The Senate's health care tax credit plan would partially offset premium costs to help ensure continued coverage for employees."
The Senate Majority's proposal would allow small businesses, defined as 50 or less employees and net income of $290,000 or less, a tax credit of 10 percent of their cost of health insurance premiums against their income tax liability when the employer provides a benefit of 50 percent or more of the cost of health insurance. This plan would save New York's small businesses approximately $235 million annually.
"A majority of small businesses in New York offer their employees health care coverage and must face annual premium increases of over ten percent," Senator Seward, Chairman of the Senate Insurance Committee, said. Employers who do not offer coverage cite the high cost as the primary reason for not providing coverage. Providing this tax credit will serve as an incentive for employers to continue providing coverage for employees and their families."
Additionally, the Health Insurance Tax Credit plan projects a 15 percent increase in qualified small businesses that provide health insurance for their employees. The tax credit would apply to either personal income or corporate income taxes, depending upon the taxable status of the small business. Most New York small businesses currently pay under the personal income tax with greater than 90 percent having projected annual net income of $290,000 or less and more than 1.1 million small businesses having less than 50 employees.
"Rising health insurance costs are a primary issue of concern facing small businesses in New York State," Mark Alesse, Director of the National Federation of Independent Business (NFIB), said. "A recent survey of our members found that 47 percent reported that their insurance premiums increased by more than 11 percent in the past year, 25 percent saw increases of over 15 percent. One in twenty businesses said premium hikes forced them to drop employee coverage altogether."
Approximately 40 percent of workers employed by New York's small businesses are currently covered by employment based health insurance. The average premium cost for health insurance is projected at $2300 per year for individual coverage and $5000 per year for family coverage. In order to qualify for the credit, the small business must pay at least 50 percent of the premiums cost. According to the 2000 Small Employer Health Benefits survey, over 90 percent of small businesses that provide health coverage currently pay more than half the cost of the premium.
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