Small Maine Nonprofits see Immediate Benefit from Passage of Health Care Reform

The Patient Protection and Affordable Care Act signed by President Obama on March 23rd contains several provisions that would help nonprofit employers control health care costs. The small employer credit would help all small employers (defined as 25 or fewer employees and average wages below $50,000 per year) provide insurance to their employees.

• In Phase I (2010-2013), small nonprofit employers can take a credit (in the form of 25% of the employer contribution for employee insurance premiums) and apply that credit to taxes withheld through payroll (and employees would still get full credit for taxes withheld from their pay).

• In Phase II (2014-onward), the amount increases to 35%.

For more information on how to actually calculate and apply this credit, visit our national partner, The National Council of Nonprofits, online.

In earlier versions of the Senate bill, the small business credit was not available to nonprofits because it was applied to income tax, which they do not pay. As one of the “Gang of Six”, Senator Olympia Snowe played a pivotal role in shaping the Senate Finance Committee’s ultimate version of health care reform, which became the Patient Protection & Affordable Care Act.

“Because she listened to us and immediately understood the situation, she became a champion for finding a way to insure that nonprofits were not left out of the Senate version of health care reform,” remarked Brenda Peluso, Director of Public Policy for the Maine Association of Nonprofits (MANP). “We thank Senator Snowe and her staff for working with us to make this incentive available to nonprofits while keeping it within the tax code.”

Had the Small Business Credit been handled outside of the tax code, it would become susceptible to the appropriations process on an annual basis. This strategy ensures that the credit will be available until it is repealed by an act of congress.

Scott Schnapp, Executive Director of the Maine Association of Nonprofits, observed: “Every dollar nonprofit employers pay in higher insurance premiums is another dollar taken away from delivering essential services to people in need in this challenging economy. Nonprofits across Maine thank the Senator for her initial work to include nonprofits in the bill.”

Although House members were not successful in amending the House version of the bill to include nonprofits in their small business incentive provision, Representatives Michaud and Pingree signed a “Dear Colleague” letter in support of such an option. MANP thanks the Representatives for their support of the nonprofit sector.