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Small business tax, health care bill introduced.

June 23, 2009

As part of their continued effort to increase access to quality, affordable health care for American small businesses, Senators Olympia J. Snowe (R-Maine), Kit Bond (R-Mo.) and Jeff Bingaman (D-N.M.) introduced S. 988, the SIMPLE Cafeteria Plan Act of 2009, legislation to update the tax code to allow small business employees to purchase employer-provided health insurance with pre-tax dollars.

The SIMPLE Cafeteria Plan Act of 2009 would create a Simple Cafeteria Plan for small businesses that would be modeled after the Savings Incentive Match Plan for Employees (SIMPLE) pension plan enacted in 1996. Under current law, employers must demonstrate that a certain percentage of their employees actually participate in the plan in order to qualify for tax-free treatment. However, because most small businesses cannot satisfy these rules simply because of their size, they are prevented from creating regular cafeteria plans, and their employees are oftentimes unable to purchase health insurance and other employee benefits from the employer.

This bipartisan measure updates the tax code to allow more entrepreneurs to offer their employees quality, affordable health care coverage. In addition, the bill would strengthen current law for all cafeteria plans by expanding dependent flexible spending accounts (DCFSA) and including coverage for long-term care benefits.

In comments submitted to Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa), regarding their paper titled "Financing Comprehensive Health Care Reform: Proposed Health System Savings and Revenue Options," NSBA highlighted S. 988 as an option to address tax code inequities as well as enable and empower business-owners to offer the same health insurance and savings options currently available to employees of large companies and government agencies.

In 2003, NSBA published Small Business Health Care Reform--A Long-Term Solution for All. The cornerstone of NSBA's proposal is to reduce health care costs so that small businesses, their employees and dependents have access to quality, affordable health insurance. This legislation is a strong first step towards removing barriers that keep small businesses from offering health care plans and savings options to their employees.
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Publication:The Weekly Advocate e-Newsletter
Date:Jun 24, 2009
Previous Article:New health care compromise offered.
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