• House Focuses on Health Care This Month, NASE Calls for Reform
• Estate Tax Compromise a Possibility
• SBA Program Would Support Women-Owned Businesses
• Member Poll: Immigration Reform

House Focuses on Health Care This Month, NASE Calls for Reform

The NASE supports important changes to the current health care system as the U.S. House of Representatives plans to work on health care legislation for the rest of the month. Elimination of the self-employment tax on health insurance premiums, implementation of small-business health plans, expansion of health savings accounts, and health care tax credits would benefit the nation’s self-employed and micro-businesses as they struggle with health coverage costs. “Micro-business owners and the self-employed have a particularly difficult time managing health care costs in this country,” said Kristie Darien, executive director of the NASE legislative office. “As an important segment of the country’s economy, we hope that Congress will consider the needs of micro-business owners during this health care crisis.” The House recently made headway on legislation that would have implemented health information technology (IT) across the county, but the bill - H.R. 4157 - has been held up due to budget constraints. The bill would have created a panel to determine national standards for electronic information storage and interoperability. The NASE supports a secure national electronic patient record system as an efficient and cost-effective step forward. Additionally, the NASE favors the following changes to the current health care system: Elimination of the Self-Employment Tax on Health Insurance Premiums Under current law, the self-employed cannot consider health insurance deductions as ordinary and necessary business expenses, while corporations can. The self-employed must pay self-employment (FICA) taxes on the amount of the health insurance premium at a rate of 15.3 percent. The NASE demands that this inequity faced by the self-employed be corrected. H.R.4961 and S. 663 have been introduced as stand-alone bills to address this inequity. Small Business Health Plans Small-business health plans (SBHPs) would assist the self-employed and micro-business owners in receiving cost effective and comprehensive health care coverage by allowing them to purchase health insurance in large pools. SBHPs would enable bona fide trade associations to design health plans exempt from state mandates for all members. Micro-business owners and their employees could access health insurance plans offered through these trade associations regardless of their state of residence, much like the identical plans large employers offer its employees in multiple states. Expansion of Health Savings Accounts with High-Deductible Health Plans Heath savings accounts (HSAs) are used in conjunction with high-deductible insurance policies. Instead of paying a high monthly premium for insurance, a low premium, high-deductible health plan is purchased. The HSA then acts as an investment account from which people can withdraw money tax-free for medical care. Money not used on medical expenses accumulates tax-free interest until retirement, when it can be withdrawn for any purpose. Health savings accounts provide an alternative to the ever-rising cost of health insurance premiums for micro-business owners. Currently over 3 million people have HSAs and the Bush Administration is aiming to provide incentives to grow that number. Senator Tom Coburn, R-Okla., and Representative Eric Cantor, R-Va., have introduced legislation on the matter. Health Care Tax Credits Health care tax credits would assist the self-employed and micro-businesses in purchasing health insurance. They would also assist individuals employed in businesses that do not offer employer-sponsored health plans to access health insurance. Specifically, the NASE supports a tax credit that is refundable which would allow lower income workers who do not owe income taxes to receive the full value of the tax credit. “The NASE has made health care reform a top priority during this Congress and will continue to fight for the rights of our nation’s self-employed,” said Darien. For more information on the NASE’s position on health care, visit http://advocacy.nase.org/. Tell your legislators to support these important health care issues by visiting the online NASE Legislative Action Center at http://advocacy.NASE.org. Estate Tax Compromise a Possibility After the Senate was unable to close debate on a bill to repeal the estate tax in order to vote on the measure, Senate Majority Leader Bill Frist, R-Tenn., called for compromise this week. Deeming it impossible to get legislation for a full repeal through the Senate, Frist asked the House to quickly pass a permanent change to the estate tax. Frist wants legislation passed and signed into law by the end of his term (this year) and tax bills must originate in the House. House Ways and Means Committee Chairman Bill Thomas, R-Calif., introduced the new legislation. The NASE supports H.R. 5638, which would permanently exempt estates up to $5 million for an individual and $10 million for a couple. Additional assets would be taxed at 15 percent and estates above $25 million would be taxed at 30 percent. House Majority Leader John A. Boehner, R-Ohio, has said the House will vote on Thomas’ bill this week. Presently, the first $2 million of estates per individual are exempt for estate tax purposes. In 2009, the exemption level is scheduled to increase to $3.5 million for individuals and by 2010, it will be fully repealed. However, in 2011, the estate tax is scheduled to be reinstated as the tax cuts of 2001 expire. Let your Members of Congress know how you feel about the estate tax through the online Legislative Action Center at http://advocacy.NASE.org. SBA Program Would Support Women-Owned Businesses The U.S. Small Business Administration (SBA) has announced a proposal to increase the percent of federal contracts granted to women-owned small businesses. The plan would follow a similar structure of programs for other disadvantaged groups. The SBA will be receiving public comments on the proposal until July 17. If approved, the Women-Owned Small Business Federal Contract Assistance Program would set aside funds for approved businesses, and aims to raise the percent of federal contracts awarded to women-owned businesses to 5 percent. Although this percentage has been a goal for the SBA since 1996 and supported by a measure in 2000 that allowed the SBA to channel contracts to businesses owned by women, it has never been met. In 2004, the most recent year for which statistics are available, around 3 percent of federal prime contracts were awarded to women-owned small businesses. The Rand Corporation, a nonprofit think tank, is currently performing a study to determine whether women-owned businesses have been discriminated against in federal contracting. However, a Government Accountability Office report noted in 2001 that the greatest difficulty with the goal of 5 percent was the absence of a “targeted government program for contracting with women-owned small businesses.” The SBA’s new proposal seeks to remove that impediment. The proposal would also permit federal agencies to restrict competitions for contracts of up to $3 million to only women-owned businesses. If the proposal does take effect, the SBA will be required to define what qualifies as a woman-owned business, as well as an economically disadvantaged woman-owned business. The U.S. Women’s Chamber of Commerce feels that women-owned businesses should be allowed to self certify for the program, whereas the SBA feels this will increase the risk of fraud. The proposal comes as the result of a lawsuit by the Women’s Chamber that the SBA was taking too long to enact the statutes established by the 2000 Small Business Reauthorization Act. For more information for women entrepreneurs, visit http://women.NASE.org. More information on the NASE’s legislative priorities can be found at http://advocacy.NASE.org. Member Poll: Immigration Reform The issue of immigration has been front-page news over the past few weeks. Both the Bush Administration and Congress are working on proposals to reform our current immigration policy and address the issue of undocumented immigrants within our nation. Immigration has a large impact on our economy and small businesses in various industries. Let the NASE know your opinions on current immigration policy and suggested reforms by visiting the MyNASE Web site at http://my.NASE.org/. Log in to your free MyNASE Web account. If you have not set up an account, you can do so at http://my.NASE.org/ with your member number.