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Health Care Reform Update

by Brenda Peluso

In the month since Sen. Scott Brown (R-MA) was elected to fill the seat of Sen. Edward Kennedy, President Obama and Democratic leaders have struggled to come up with a strategy for completing action on health care reform. More on the political maneuvers and machinations below, but first the good news for nonprofit employers about the bill the Senate passed on Christmas Eve.

Because nonprofits around the country advocated for equal treatment, the Senate bill includes a provision that helps all small employers (defined as fewer than 25 employees and average wages below $50,000) provide insurance to their employees.

  • In Phase I (2011-2013), small nonprofit employers could take a credit (in the form of 25% of the employer contribution) 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 would increase to 35%.

The Senate bill treats for-profits and nonprofits differently in these respects: for-profits get a higher rate for the credit during both phases (35% in Phase I and 50% in Phase II), but nonprofits can claim the credit each pay period whereas for-profits must wait until year-end to claim the credit, and then, only if they are profitable. (This chart compares the House and Senate versions.)

But wait, there is more good news for nonprofit employers: President Obama’s health care proposal released yesterday morning is based on the Senate bill that includes this relief for nonprofits. Since that package is reportedly the shared view of the President and congressional Democrats, this means the odds are in favor of keeping the relief in the final bill, assuming one can be signed into law.

This brings us back to the political process. On Thursday, February 25, President Obama is hosted a televised health care summit where Republican and Democratic leaders and congressional experts talked through the issues to see if they could find common ground. The President treated the event as the last clear chance for Republicans to help shape the final legislation. The event did not result in any new bi-partisan concepts and Democrats are reportedly planning to follow a complex procedural process whereby the House would approve the Senate-passed bill, and then the House and Senate would enact amendments to that bill as part of the budget reconciliation process where filibusters are not allowed and only 51 votes are needed.

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