The administration is touting a new tax credit for small businesses with 25 or fewer employees to buy group health insurance,https://higginscompanies.com/health-insurance/group-health-insurance/ . But because the health insurance tax rebate is lessened the more employees a company has, the optimal number is 13.
Say you have 13 employees and want to hire a few more employees because business is picking up, and you want to give them health insurance. Doing so would cost the company $4200 less in tax rebates for health insurance. A company with 20 employees wanting to add one employee to the group health insurance would result in $3733 less in the tax rebate for medical insurance.
Another problem with the program, and it’s a big one, is that it only lasts a couple of years. Very few small employers, already working with slim margins, are going to offer group health insurance for a couple of years. The thought of having group medical insurance has to make sense without the tax rebate. If it made sense to the employer to offer group health insurance without the tax rebate they would have already implemented a group health insurance policy. For those companies that do buy a group health insurance policy for the tax rebate, they will dump their employees on the government plan in 2016 just like every other small employer with less than 50 employees will do.
Lastly, the maximum 35% tax rebate doesn’t come close to the cost of an average group health insurance policy. Group medical insurance policies are at least twice the cost of individual health insurance policies. This is due to all the government mandates already in place.
Get the government involved to a large extent in business and bad things start to happen, it’s as simple as that. Let competition and the free market take care of itself.
Michael Higgins
602.405.8769
An Arizona health insurance broker.