SHOP Tax Credit Ends in 2016

[RayNY]

This was brought to my attention by a broker going through the SHOP training in NY. It specifically says "The SHOP Small business tax credit will continue through 2016".

He asked me, "Does the mean that the credit is gone in 2017? No more subsidy for small businesses?"

A bit of research turns up articles like this one: http://www.nclr.org/images/uploads/publications/HPPSBB_ACA51012.pdf which clearly states "tax credits phase out" in 2016 and beyond.

https://www.smc.org/content/what-do-you-need-know-about-small-business-tax-credits "tax credit lasts two years"

Fact Sheet: Small Business Health Care Tax Credit | The White House "Firms Can Claim Credit for Up to 6 Years. Firms can claim the credit for 2010 through 2013 and for any two years after that."

This caught me off guard, and I can't recall seeing mention of this on the forums. Anyone have more information?

 

[ABC]

I don't think it will be realistic for a small group to buy an exchange plan through the shop.
Why would an owner pay a % of that plan if the employee qualifies for a deeper subsidy if they apply on their own?

 

[RayNY]

It's an incentive. There will always be businesses that want to protect their employees and provide a compensation package beyond simple salary.

Also, at least over here, there are tons of small businesses where none of the employees are eligible, or healthcare is not realistically affordable. Paying with pre-tax dollars lowers the cost significantly. Raising salary to make an employee whole again, even after subsidies, will likely be just as expensive, and will be throwing tons of unnecessary tax dollars at the gov't.

 

[ABC]

What makes you think because benefits are dropped the employer is going to raise compensation?

I had some supplemental guys in my office the other day talking that way.
I doubt that would happen to all the employees of a small group.
Maybe for 10% of the employees.

The only the shop plan will have real incentive is if the employees can afford their contribution levels and be willing to pay.

Then the issue of plan design is will play a factor.

The owner is only eligible for 35% of what they contribute back in the form a tax credit. Most small group employers are only pay a portion of the employee cost not dependents.

So again we are trying to do business the same way we have been doing for the last 40 years.

 

[RayNY]

Regardless of what happens, the 2016 end-date is pretty hidden from most places. I haven't heard anyone mention it, and it is certainly something to factor in when projecting costs and making plans for the future.

Websites like this : https://www.healthcare.gov/will-i-qualify-for-small-business-health-care-tax-credits/ and BusinessUSA | Discover. Connect. Grow. make no mention of the SHOP subsidies ending.

 

[leevena]

Regardless of what happens, the 2016 end-date is pretty hidden from most places. I haven't heard anyone mention it, and it is certainly something to factor in when projecting costs and making plans for the future.

Websites like this : https://www.healthcare.gov/will-i-qualify-for-small-business-health-care-tax-credits/ and BusinessUSA | Discover. Connect. Grow. make no mention of the SHOP subsidies ending.

It may not have been widely advertised, but it has been there from day 1.

 

[RayNY]

Lee,

I was talking with some other brokers in my office, and they reminded me of that fact. It slipped my mind (as well as some co-workers) because it has not been mentioned in recent talks.

I guess, just chock this up as a reminder that the SHOP credits are not long term, but the individual APTC's are.

 

[AllenChicago]

I saw that the SHOP tax-credits would end after a couple of years while reading the CMS certification course. Thought it was strange that the training mentioned this, considering that I was only registered for Individual Plan marketplace certification.

But like ABC said, the SHOP marketplace will likely have very few enrollees. I try to come up with reasons for small businesses to offer health insurance and endure the additional government interaction, but can't find any.

 

[RayNY]

Did you guys forget about Employee Choice? The ability to offer multiple plans and a defined contribution so employees could pick the plan they want and everyone is happy?

I think SHOP may see significant numbers, but it's all just opinions vs. opinions right now.

 

[Yagents]

Most states will have 1 shop carrier
Defined contribution model is not allowed in SHOP