Small firms may get health-care credits

A legislative committee on Wednesday endorsed a bill that its sponsor says will be "a nice start" in helping small businesses address employee health-care costs.

HB406, passed out by the House Business and Labor Committee by a 9-3 vote, would allow businesses with between two and 50 employees to receive a nonrefundable income tax credit of up to $1,000 per worker for certain health insurance premiums.

A company would be eligible for the credit if at least 80 percent of its employees were covered by health-care insurance offered by the company. The credit would be for either the insurance premium that the company paid for each eligible employee or $1,000 for each insured employee, whichever is smaller.

A fiscal note with the bill says its passage would cut the state's education fund by $40 million in fiscal 2008 and $41 million in fiscal 2009.

"This is a tax credit to go to an incentivized business to provide health insurance for their employees. ... So, if you go through and provide the health insurance, it will reduce the drain on the state of Utah so that we don't have so much unpaid-for emergency care, charitable care, so many people on welfare. ... I think it's a good incentive to assist businesses in providing health insurance to their employees," the bill's sponsor, Rep. Wayne Harper, R-West Jordan, told the committee.

Questioned about the $1,000 cap, Harper described the credit as "meager."

"It costs a lot more (than $1,000) to provide health insurance," he said. "This is just a meager tax credit that says you can get a little bit of money back. We recognize the fact it's going to cost the state millions of dollars, but it's also going to save the state tens of millions of dollars versus those who will be on charitable care if a business doesn't include them.

"As the business community told me, this is a nice start, but if you're looking at $12,000- or $20,000-a-year premiums for the employees, it's a drop in the bucket. But it's a start."

Harper said the bill could be tweaked when it is heard by the full House, adding that becoming a deduction instead of a credit and redefining who is an eligible employee are possibilities.

Rep. Gage Froerer, R-Huntsville, said he wondered how the bill would be applied to employees who are covered under their spouses' insurance policies. "I think it's a great bill, but I'm concerned you're going to exclude some companies from taking advantage of this tax credit by not excluding people who are going to opt out," he said.

Rep. Jackie Biskupski, D-Salt Lake, voted against the bill, saying the matter should be part of interim committee study of business health-care issues.

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