The Richmond Register

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April 20, 2014

Did you miss small business health-care tax credit?

RICHMOND — “What we have here is failure to communicate.”

― From the movie “Cool Hand Luke”

A Kentucky professional who owns his own business found that he missed getting the health-care tax credit.

For the past four years!

Since the credit is worth 35 percent of what he is paying in health insurance, his business lost out on about $40,000.

It gets worse. This year he could get a 50-percent tax credit. Since his firm is paying about $50,000 in health-care benefits, it would have been a savings of about $25,000.

Instead his business will get nothing.

He purchased an Anthem Blue Cross group insurance policy from his long-time insurance agent in Kentucky and locked in for the entire year. In order to get the tax credit in 2014, he had to purchase the plan from a health care exchange.

Kentucky’s health care exchange, which has won accolades as one of the best run in the country, offers plans from Anthem Blue Cross. Almost exactly like what my friend has now.

But at half the cost.

He lost out on $40,000, although he can get some of it back if he goes through the screaming agony of filing amended tax returns for the previous years. (Apparently, he can’t get 2010 as it was too far in the past.)

He’s paying twice as much for health insurance as he should be paying, and there does not seem to be an easy way for him to get out of his plan and get to the exchange. The health care credit offers a provision allowing his firm to get the money monthly, so he could take that money and possibly hire another employee or improve his cash flow.

Like most small businesses, (including mine) health care is the biggest budget expense behind payroll. Unlike many employers, he has paid for 100 percent of his full-time employees’ health care coverage and has done that for many years. With so many businesses looking for ways to dump health insurance or reduce their coverage, he ought to be rewarded.

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