Business benefits: Indiana's new health insurance has some incentive for small business, too.

AuthorHeld, Shari
PositionHEALTH CARE

Democrats and Republicans in both the Indiana House and Senate rallied together and passed House Bill 1678, also referred to as the Governor's Health Plan or the Indiana Check-Up Plan. It calls for a 44-cent increase in the price of a pack of cigarettes, which is estimated to encourage 60,000 Hoosiers to kick the habit. Thirty-three cents of the increase will go toward subsidizing the new health insurance plan.

The cigarette tax went into effect July 1st, with the health insurance plan slated to begin operation next January. "Almost everything we do regarding this plan requires federal approval," says Mitch Roob, secretary of the Indiana FSSA. "There are 1,000 things to figure out, and if we figure out 900 of them, there are still 100 to go. It is a complicated plan, and we are pleased to have the opportunity to implement it."

While the plan's main focus is to provide health insurance for low-income, uninsured Hoosiers, it will also impact Hoosier businesses. Just how much, though, remains unclear.

Health insurance tax credit.

One thing that is clear is that escalating health insurance costs are forcing more and more small businesses to drop coverage for their employees. From 1999 to 2004, Indiana had the nation's second-highest percentage drop in workers who receive employer-sponsored health insurance.

As an incentive, the new plan offers tax credits to businesses that provide employees with health insurance under a Section 125 cafeteria plan, providing they haven't offered coverage for the past year. Businesses of any size are eligible for a $50 tax credit per employee, up to a maximum of $2,500.

"Our organization is a little skeptical as to whether that amount of money is really going to help tip the decision in favor of a business actually getting health insurance," says Kevin Hughes, Indiana state director, National Federation of Independent Business, a small-business advocacy association.

The overall impact, however, is anticipated to be a big boon to uninsured Hoosiers.

"We think the 125 plan will help more Hoosiers to purchase health insurance, and that this product will cover additional pregnant women and additional children," Roob says. "It's hard to know exactly, but somewhere between 120,000 on the low end and 200,000 on the high end of additional Hoosiers will be able to purchase an affordable health-care plan with, in most cases, a partial government subsidy"

Wellness program tax credit.

Under the new plan, employers with two...

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