Public Policy
As part of health care reform legislation, Congress is considering incentives to help smaller employers provide health insurance for their employees. Nonprofit employers experience the same higher costs and limited options as their for-profit counterparts, and are struggling to maintain their service programs with severely reduced revenues. Congress must ensure that any health care reform measures provide incentives to nonprofit employers that are equivalent to those provided to for-profit employers.
Status
The House has released details of a final health care reconciliation package. The proposal maintains a provision from the Senate health care bill and the President's proposal that would provide a tax credit to qualifying small employers to help purchase health insurance for their employees. Tax-exempt 501(c) organizations would be eligible to receive the credit.
A group of Representatives led by Rep. Betty McCollum (D-MN) sent a letter to Speaker Pelosi January 13 urging the adoption of the Senate small employer tax credit which expressly applies to nonprofit employers. Independent Sector sent a letter to Speaker Pelosi and Senate Majority Leader Reid urging them “to address the needs of the millions of Americans employed by nonprofit organizations to provide critical services to communities by including the Senate small employer tax credit in the final bill.”
Current Proposal
The final health care package would provide a tax credit beginning in 2010 through 2013 for businesses and 501(c) organizations with less than 25 employees and average wages below $50,000. During those three years, the bill permits a credit for all eligible small employers that provide insurance for their employees, and beginning in 2014, credits are available to employers purchasing employee coverage through health insurance exchanges. Nonprofits could take a credit in the initial period of 25 percent of the employer contribution and 35 percent in subsequent years, and apply the credit to taxes they withhold from payroll. Employees would still receive full credit for taxes withheld from their pay. For businesses, the credit is 35 percent initially and 50 percent in the proceeding years. The different values of the credit reportedly relate to efforts at cost containment (the nonprofit provision costs $2.1 billion over 10 years) and to reflect the differences in the frequency and likelihood of paying taxes between for-profit and nonprofit employers.
The House-passed bill provides a small business tax credit that does not apply to tax-exempt organizations.
Learn what you can do to help to help ensure that Congress passes health reform legislation designed to provide direct incentives for nonprofits to have access to affordable health insurance for their employees.
Last updated: March 18, 2010
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