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.
This article originally appeared on Watchdog.org