SHOP Tax Credit Ends in 2016

[Ann H]

Employee choice was delayed in the FFE exchanges until 2015.

Tax credits phase out, like you said.

Tax credits go from 35% to 50% for the next two years, but only if you buy group insurance through the SHOP exchange.

Credits are not advanceable nor refundable, and the business only gets the credit if they have a tax liability. There is a credit carryforward / carryback for several years.

Most businesses that applied for the tax credit found they didn't qualify, because some of the eligibility requirements are more difficult than they first appear.

I can't imagine any reason a business would want to buy group insurance in the SHOP exchange except for this tax credit or for the fact that there is apparently no Employer Contribution required (there is 70% participation required, though).

 

[RayNY]

The employee choice was the jewel in the crown, I realize that in FFE states it was delayed a year, but I still feel that will be the reason for anyone to be in the SHOP.

From what was learned in the certification class, it's going to be a real PITA to get your employees into it in the first place.

 

[ABC]

It still comes down to cost.

How many new groups did you write that put a group health plan in place because of the small business tax credit?

 

[RayNY]

ABC, I can't tell if you're playing devil's advocate or being serious.

I hope you're not being serious, because by your logic, employer sponsored healthcare wouldn't exist. If it's just about cost, no one would incur that cost.

 

[ABC]

ABC, I can't tell if you're playing devil's advocate or being serious.

I hope you're not being serious, because by your logic, employer sponsored healthcare wouldn't exist. If it's just about cost, no one would incur that cost.

I am being serious.

Last year how many of your clients took advantage of the small group tax credit which is similar to the Shop?

I had groups that spent more money on professional service than what they got back.

The tax credit is on a sliding scale.

Which leads me to my conclusion that the SHOP tax credit will not have big success.

Do you think that rates on the on the SHOP plans are going to be less than what they are now?

 

[Ann H]

Most carriers locally are putting just 1 plan on the SHOP exchange because they don't want to invest the effort. That speaks volumes.

Every group client of mine who wanted the tax credit spent more time than it was worth. It sounds simple on the IRS fact sheet, but it's not simple. The exceptions and graded scale means most groups wind up with very little tax credit.

And, to answer your question, ABC - I made exactly ZERO group sales based on the incentive of the small business health insurance premium tax credit.

 

[stuy119]

And, if reports are true, you're 100% guaranteed to get an IRS audit if you file for the tax credit.

So there's that incentive.

 

[RayNY]

Stuy, hadn't heard that, but it's good to know.

ABC, I'm in New York, businesses don't have average incomes low enough to get a credit to even cover one month of one employee's premium. Not a single client on our book claims it that I know about. I doubt the non-shop small business product will be cheaper than the SHOP product, my gut tells me that richer product/networks would be available on the "outside".

Moral of the story is, realistically, subsidies are only available for individuals.

I agree there is not much incentive to enter SHOP when the employee choice is not working.

The availability of credits is always a bullet point on my list when I explain what SHOP is (which happens a few times a day). I just figured that if this little fact had slipped my mind, it probably slipped someone else's, and it's a fact worth considering.

 

[NWBenefitProvider]

My clients don't even have the option to go to the SHOP exchange LOL! Here in WA, only one carrier entered and they are servicing a tiny handful of counties where there is the lowest population and number of businesses. I am glad the other carriers walked, although many say they will reconsider entering the SHOP in 2015. I hope it falls on it's face everywhere. The whole thing is too complicated to get the credit and like others have said, nearly none of them qualify anyway. Another waste of taxpayer $$$$.

 

[bluediamond]

Doesn't that small employer, to get a tax credit have to have an average of $50,000 annual salary for his/her employee's? Or is that something else I read? Keeping up with this stuff is driving to drink again.