From the Desk of Bob McNett….
Recently The McNett Agency had a request from a current small group client to enroll his small business in the SHOP Small Business Exchange so he could have access to a rather substantial tax credit available through this government-sponsored program.
The Small Business Tax Credit is part of the Affordable Care Act (ACA) and has been available since 2013. To qualify, a business must have 25 or fewer employees, with average wages of $50,000 annually or less (not including owners and officers,) and the employer must pay at least one-half of employee-only premiums.
A qualifying business has access to a tax credit (a direct reduction of bottom-line taxes owed…better than just a tax deduction) that, at times, can be very substantial. This particular business has eleven employees with an average salary of around $38,000. Based on an on-line tax credit calculator, we figured that his tax credit would be around $10,000, a dollar-for-dollar reduction in the taxes the business would owe for the year 2016. This would have paid for approximately two and one-half months of the health insurance premium for employees on the plan, definitely something worth the trouble of applying for.
I have taken advantage of this tax credit myself, as the employer sponsor of The McNett Agency group health insurance plan. In 2013, I sent an email to all our group insurance clients informing them of this new tax credit. For 2016, I won’t be claiming it. Read on to know why.
For 2013, 2014 and 2015, a small business could claim this tax credit by completing a simple additional tax form on the end-of-year return. For tax year 2016, this simple way to claim the credit changed……now, the employer must go on-line to the government website, www.healthcare.com, and, clicking on the Small Business icon, select a plan from a participating carrier. Even if the business currently is enrolled with a qualifying plan, it must re-enroll via this government website. There are two carriers that participate locally, Blue Cross and CommunityCare. This particular business currently has their coverage with Community Care, through The McNett Agency.
So, being the service-oriented brokerage firm we always try to be, I offered to go on-line to the website and re-enroll his employees into his current Community Care plan, so he could have access to this credit.
Well, this is where the adventure began.
Since 2016 is the first year that a business has to enroll through the government website to get this credit, we had, as a benefits broker, never gone through this process with a group insurance client before. I had enrolled a number of clients for individual insurance through the website, but had never tried to enroll a small business for a SHOP plan through the website.
First, the website told me that I would have to register as a broker to use the website, even though I was already registered to write individual insurance. Then, the website gave the impression that certain educational courses had to be completed for me to register. After numerous phone calls to several sources to try to find out what these educational requirements were, I was informed that, in fact, no educational requirements were needed. So, I was able to register as a broker. That took all of my first week’s efforts of trying to go through the nooks and crannies of this process. But I felt like I had leaped the first hurdle, so….on to the next one.
Then, I was told we needed to register the small business involved. I imput the information on the business and the owner of the business. The website then told me that it could not identify the owner of the business, so I had to call our client to ask him to send me a copy of his driver’s license so we could scan it to an identification service being used by the website. So, I did all that, and, sure enough, in a couple of days, we got a message that the owner was identified and really was the person he said he was. So, second hurdle jumped….onward we go.
At this point, so to speak, the “stuff” hit the fan. I had to select the insurance carrier desired, the plan selection desired, and list the employees needing to enroll. This I bravely tried to do, but the website would just come to a certain point and refuse to advance. What was I missing?
For about the fourth time, I called the help-line shown on the site and tried to get the website assistance person to walk me through to the end. I even asked Julie Pigg, my office manager, to get on the line, because I knew she is a lot smarter than me, and she would likely be able to whiz right through it. Well, no such luck. The help-line lady, to her credit, did sound pretty intelligent, having a rather attractive British accent, but turns out she didn’t seem to have a good idea of how the whole thing worked either. Her advice mainly consisted of “well….er….hmmm….huh!)
She did tell us that, when we were able to get the business itself approved for the insurance carrier and plan design selected, we would then have to have each employee go on-line to enroll himself in coverage. Hearing this, a black, lightening storm cloud formed over my brain.
I had a vision of one of this business’s employees showing up at a hospital emergency room at 3 a.m. and discovering that somehow their enrollment info had never reached Community Care’s computers. I could envision the fireworks display going off over our office when the phone calls starting burning up our lines about 8 o’clock that morning.
Around five weeks had gone by since I first opened this website. I had been in and out of this website more times than I could count over this time, with no resolution. And now, we are supposed to have each employee go on there to enroll?
So, I phoned the client, saying either this website is incredibly user-unfriendly or we’re just incredibly stupid, but I just don’t think this is a smart road to go down. A tax credit is not worth the pain that this process could cause his employees.
Fortunately, my client, who I have known for probably 25 years and is a really good guy, and probably understood that I’m not the brightest bulb on the tree anyway, agreed that it was probably best to discontinue the process. So, I did, but with a haunting since of guilt that I had failed in my duty. I’m supposed to know this stuff, but….wow! How could anybody get through this website from beginning to end?
I think nothing has shown the scary inefficiency of government more than the technical aspects of the ACA. When healthcare.gov was unveiled in 2013, as you may remember, the website for buying individual health insurance simply did not work, and millions of people were frustrated in their effort to buy individual health insurance. This happened even though the Department of Health and Human Services had months to prepare for the grand opening. Now, in the first year where employers must go to this website to get the tax credit, I can personally attest that, at least from my perspective, it just doesn’t work like it should.
Maybe I should hire a fourteen year old assistant to help me with my internet ignorance.
Robert K. McNett, LUTCF
The McNett Agency
918 294 3712 Fax 918 494 6725
Toll Free 1 866 497 7119