Exempt Organizations Advisory - House Version of Health Care Bill Excludes Exempt Organizations from Incentive

Catherine W. Wilkinson (cwilkinson@steptoe.com)
Suzanne Ross McDowell (smcdowell@steptoe.com)

The House health care bill, America's Affordable Health Choices Act, H.R. 3200, provides a tax credit for a portion of the health coverage expenses of small businesses that provide health insurance to their employees. Small businesses are those that have fewer than 25 employees and average wages of less than $40,000. Because exempt organizations do not pay tax, this credit would exclude small exempt organizations. In contrast, the current version of the Senate HELP Committee's health care bill provides a direct subsidy, rather than a tax credit, to qualified small employers to help provide health insurance. This subsidy would be available to all employers including exempt organizations that meet the qualification requirements. The Senate Finance Committee has not finished working on a bill, so it is not known at this time what incentives for small businesses or employers will be included.

Text of the Senate HELP committee legislation is available here (see page 94 for the small employer provisions).

Text of America's Affordable Health Choices Act H.R. 3200 is available here (see page 188 for the small business tax credit provision).