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Bill proposes to offer small businesses a tax incentive

February 7, 2001
Contact: Lucas Hamilton

Bill proposes to offer small businesses a tax incentive for providing employees with health insurance

A bill under consideration by the Senate Taxation Committee Thursday would provide a tax credit to small businesses that offer their employees health insurance.

Montana has one of the highest rates of uninsured individuals in the country and at the same time struggles to keep young Montanans working in the state. Senate Bill 316, sponsored by Sen. Emily Stonington of Bozeman, takes a step toward alleviating both problems.

The bill is part of State Auditor John Morrison's goal to reduce the number of uninsured people in Montana. It provides a tax credit to employers with two to nine employees who offer a health insurance benefit, provided they have not done so over the past two years.

"One of the most important things to working families is health care," Morrison said. "This incentive would help employers attract and retain trained and skilled employees in this tight labor market and would make them more competitive in the hiring process."

Montana is a small business state with more than 17,100 businesses employing between two and nine people. Nearly 72,500 Montanans work for those businesses. About 75 percent of them are employed full time and would qualify for the benefit.

In 1999, 18.6 percent of Montanans did not have insurance coverage, according to the U.S. Census Bureau. Only about a quarter of small businesses in Montana offer health coverage, largely because it is cost prohibitive.

"Senate Bill 316 doesn't give anything away," said John Ryan, chief executive officer of Grand Prix Motoring Accessories in Missoula. "It merely gives a small business a competitive chance and allows them time to shore up resources to pay for medical care. The tax credit is gradually reduced over a period of time, which helps ease you back to paying full state taxes."

The bill does not mandate the amount, type or extent of coverage an employer must offer to receive the credit. It provides the credit at a declining rate over five years.

"We need help and a fighting chance to grow and hire more people," Ryan said. "This proposed tax cut would allow me to completely fund my health plan the first year."

This bill helps businesses and their employees, but it also helps Montana's taxpayers.

"By expanding health care coverage to the uninsured, fewer people will need Medicaid, and medical professionals won't have to pass the costs of unpaid bills on to those who are insured," Morrison said.
The hearing on SB 316 is at 8 a.m. Thursday in Room 405 of the State Capitol.


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