Bill would provide firms refundable tax credit for health-plan premiums

An Ohio senator has proposed legislation that would offset the costs of health-insurance mandates imposed on businesses operating in the Buckeye State.

Sen. Kyle Koehler, R-Springfield, said his measure, Senate Bill 129, completes work begun in 2016 with the passage of House Bill 463 during the 131st session of the General Assembly of the Ohio Legislature.

In addition to implementing a two-year moratorium on new health-care mandates, HB 463 promised that the lawmakers develop tax credits to offset additional employer costs associated with these mandates.

"We are now eight years out from HB 463's enactment, and we have yet to address what was written into the bill," Koehler said during a Ways and Means Committee hearing. "As one of only a few members remaining from the 131st General Assembly, I realize now how easy it is to forget what we promised business owners in Ohio. This bill seeks to fulfill those promises."

SB 129 would authorize a refundable tax credit for employer-paid group health plan premiums, allowing an employer to claim the credit against the commercial activity tax, income tax, financial institutions tax, insurance company premiums taxes, public utility excise tax or petroleum activity tax.

According to analysis by the Ohio Legislative Service Commission, the credit would equal 1.3 percent of the premiums paid by an employer for a group health plan for employees who qualify as Ohio residents for personal income tax purposes.

To qualify, the plan must be a group health insurance plan that covers employees' basic health-care services: physician, hospital, emergency health, urgent care, diagnostic and preventive care services.

The credit would not apply to self-insurance plans or to premiums paid for nonresident employees, analysis noted.

"During proponent testimony, you will hear why and how the 1.3 percent tax credit was established based on cost to employers over time," Koehler said, indicating that HB 463 required an actuarial study be conducted by the Ohio Department of Insurance to analyze the cost of 17 state health mandates.

In a news release backing SB 129 and other current legislative efforts to address what the state chapter of the National Federation of Independent Business has characterized as a health insurance affordability crisis, the group described the small-group insurance market as "becoming unsustainable for millions of small businesses and their employees."

In a report, NFIB noted the following:

Small-group insurance market enrollment has plummeted by 44 percent, from 15 million individuals in 2014 to 8.5 million in 2023;

Average single-plan premiums have gone up 120 percent in the last two decades, while average family plan premiums have increased by 129 percent for firms with 50 or fewer employees;

Thirty percent of small businesses offer health insurance, a 20 percent drop since 2000; and

Ninety-eight percent of small businesses reported concern about whether they would be able to afford to continue offering health insurance in the next five years.

"This bill isn't a free pass to private businesses," Koehler said. "They have paid their fair share to accommodate these mandates. In the end, businesses that employ Ohioans are the backbone of our economic growth. This bill will not only fulfill a promise that is long overdue, but it will provide help to those businesses that have come through the pandemic and continue to provide mandated coverage for numerous health-care services to their employees."

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