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CPA says hype over Obamacare small business tax credit is misleading

By   /   October 15, 2013  /   News  /   4 Comments

Part 28 of 97 in the series Obamacare
TO YOUR HEALTH: Gov. Neil Abercrombie announces the launch of the Hawaii Health Connector on October 1. Standing by his side is Coral Andrews, head of the Hawaii Health Connector

TO YOUR HEALTH: Gov. Neil Abercrombie shares his enthusiasm for Obamacare as Coral Andrews, executive director of the Hawaii Health Connector, stands by his side.

By Malia Zimmerman | Watchdog.org

HONOLULU — Think small business owners really are going to get tax credits through Obamacare health exchanges? Think again.

Reg Baker, chief operating officer of the Hawaii Medical Assurance Association, a health care insurance company not participating on the local Hawaii Health Connector exchange, told Watchdog.org that the tax credits aren’t guaranteed.

Small businesses can only qualify to receive the tax credits for two years, there is extensive paperwork to fill out, and they will only benefit if they made enough of a profit to benefit from the tax credit, said Baker, who is also a certified public accountant.

“A great deal of effort can be spent trying to get the credit and then with the fast phase out starting at just 10 employees and the fact that it is a nonrefundable credit it results in a lot wasted time and effort,” Baker said.

The tax credit is claimed on Form 8941, which has 10 pages of instructions and contains seven worksheets.

In addition, the credit is nonrefundable, which means if a small business has little or no profit for the year, the credit is of little value. The credit can only be used to reduce the small business’ income tax amount, Baker said.

And not everyone will qualify.  Owners, their families and dependents, descendants, step children, all types of in-laws and nieces and nephews are all excluded. Shareholders and partners of the company also are excluded, according to the Internal Revenue Service.

“What this means is that these individuals medical insurance premiums are excluded from the calculations thereby reducing or eliminating the credit,” Baker said. “I strongly suggest that all small businesses considering the small business health care credit consult with their tax preparer and get some advice before buying medical insurance from an exchange.  It could save a lot of time, frustration and disappointment down the road.”

Baker said the small business health care tax credit was established some time ago, but it has not proven popular because of its complexity and quick phase out.

State Insurance Commissioner Gordon Ito told Hawaii lawmakers last week during a five-hour special briefing that small businesses only will be allowed to choose from the priciest plans on the local exchange.

Both individuals and small businesses eventually will be able to sign up on the exchange and compare pricing and options for 95 different dental and medical plans, but the exchange’s full launch has been thwarted by a series of technical and administrative gaffs.

Coral Andrews, executive director of the Hawaii Health Connector, told lawmakers at the Wednesday special briefing she hopes the plans and pricing will be available online by Tuesday, but she couldn’t guarantee it. Not one person in Hawaii has been able to sign up for a health care plan via the Hawaii Health Connector since its launch on Oct. 1.

Reach Malia Zimmerman at [email protected]


Part of 97 in the series Obamacare
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  2. The mystery of Obamacare spending in Arkansas
  3. Obamacare raises questions for MD small business owners
  4. Kansas official on Obamacare: ‘Let someone else be the guinea pig’
  5. Obamacare insurance marketplace has plenty of kinks on first day
  6. OR’s Obamacare insurance marketplace hits technological snag
  7. Fail: Day 1 of the New Mexico Obamacare rollout
  8. Senator asks: Do you want this dysfunctional government taking over health care?
  9. Jobs, coverage at risk with Obamacare, MN union health official says
  10. Oregon’s Obamacare ads resemble middle school art
  11. VIDEO: Obamacare vs Affordable Care Act: Comedy triumphs in court of confusion
  12. Patience is key to navigating Illinois’ Obamacare marketplace
  13. Hawaii residents, lawmakers frustrated with health connector glitches
  14. Healthy young, key to Obamacare, aren’t buying it
  15. NM’s health exchange tries to lure ‘young invincibles’
  16. Obama drama: Senator blames governor for big rate hikes
  17. Progressive group navigates Oregon students through Obamacare
  18. Maddening: Trying to log onto federal health care site
  19. You know that one guy who successfully signed up for Obamacare? He didn’t
  20. What’s wrong? It’s been a week, and Obamacare website still not working
  21. HHS Secretary Sebelius back in FL after embarrassing Obamacare rollout
  22. Health centers enroll Floridians in Obamacare as application problems persist
  23. VIDEO: Stewart skewers Sebelius on Obamacare
  24. Obamacare effect? 9 companies exit Nebraska’s health insurance market
  25. Obamacare: Children of undocumented parents face an uncertain future
  26. Which way do we go? Obamacare navigator registration in TN in question
  27. NM health exchange tries to ease problems with Obamacare website
  28. CPA says hype over Obamacare small business tax credit is misleading
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  30. Reports of Obamacare fraud emerge in Tennessee
  31. After two weeks, FL online Obamacare enrollees are hard to find
  32. Illinois state governor touts 100K Obamacare enrollees, all in Medicaid
  33. Kansas lawmaker calls for crackdown on Obamacare navigators
  34. WI health care exchange seeing few getting through
  35. Hawaii’s Obamacare exchange relaunches with more glitches
  36. We’ll know next month how many people in NM signed up for Obamacare — maybe
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  38. It took this Delaware woman 11 days to sign up for Obamacare – and she was the first
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  45. Criticize this: Obamacare premiums a near match to WI disclosures
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  47. Kansas navigators say they’ve enrolled no one in Obamacare
  48. Obamacare too costly for rich Coloradans, Democrat congressman says
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  55. Illinois uses Day of the Dead to market Obamacare
  56. Sebelius denies GOP’s Terry ‘unreliable’ Obamacare info
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  64. Kansas AG: Obamacare threatens consumer privacy
  65. 1,500 in New Mexico have to move out of the high-risk insurance pool
  66. Cover Oregon website fiasco creates jobs, but costs millions
  67. For Florida’s Obamacare small business exchange, it’s crunch time
  68. Only 877 Wisconsinites have signed up for Obamacare, federal report says
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  76. People demand answers over Oregon’s Obamacare fail
  77. Calif. says ‘no’ to Obamacare freebies, makes own law
  78. HI health exchange violates federal law, League of Women Voters say
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  80. Harvard study finds ‘striking’ rejection of Obamacare by young Americans
  81. HI health exchange has signed up 574 people, for about $348,000 apiece
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  84. Lost in translation: Once-supportive Hispanics turning backs on Obama, ACA
  85. HI Obamacare exchange not fiscally sustainable, lawmakers told
  86. Illinois’ latest Obamacare targets: gold diggers and momma’s boys
  87. Now Democrats are bashing California’s Obamacare exchange, too
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  94. Video: Watch Creepy Uncle Sam make it rain
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Malia formerly served as staff reporter for Watchdog.org.

  • smelltest

    Question for CPA is how much less tax is their for starting your business in Mexico?, Costa Rica? China? Got the picture yet?

  • icthelite

    “95 different dental and medical plans”!!!!! Krist, doesn’t this tell everyone all they need to know about this program? “95 different dental and medical plans”!!! Can folks even begin to fathom the massive can of worms that are going to be opened when you have “government employees” processing your health claims?

  • ElectiveRx

    Yes, I work for ElectiveRx and we are trying to combat these issues for small businesses with affordable choices. It seems as though this credit is difficult to apply for and may not benefit many small businesses if the owners and their families aren’t included.

  • OldmanRick

    Wow, both government and IRS are going to monitor and handle claims, etc. Wow, another debacle in progress. Yet, congress and its staffers, the very self serving, bottom feeding writers and endorsers of this FUBAR bill, are exempt from its grip by executive deal. What a bunch of gutless wonders. Throw them all out in 14, 16, 18, and 20. Why 20? It will take until then to completely weed out the senate.