Brief⁽¹⁾

H.B. 2090, as amended, amends several statutes enacted in the early 1990s to entice small employers into providing health insurance for their employees. As provided in this bill, a small employer could establish a health benefit plan or small employers could develop such a plan through a trust or association relationship for the purpose of providing coverage to their employees. If the plan were offered through a trust or association, health status could not be a condition for membership in the trust or association.

The bill also offers to employers who have not contributed to any health insurance premium on behalf of their employees in the previous two years, a tax credit for each eligible covered employee. The credit will apply to all taxable years after December 31, 1999, and before January 1, 2002.

• For the first two years, the tax benefit would be $35 per month per employee or 50 percent of the total amount paid by the employer during the taxable year, whichever is less.



• In the third year, the credit would be equal to 75 percent of the lesser of $35 per month per employee or 50 percent of the total amount paid by the employer during the taxable year.



• In the fourth year, the credit would equal 50 percent of the lesser of $35 per employee per month or 50 percent of the total amount paid by the employer during the taxable year.



• In the fifth year, the credit would be equal to 25 percent of the lesser of $35 per employee per month or 50 percent of the total amount paid by the employer during the taxable year.



• For the sixth year and years thereafter, no tax credit is available.

The Senate Committee amendments remove the aggregate cap of 10,000 employees and family members who may claim tax credits, and provide that, if the income tax credit allowed exceeds the tax owed by the employer, the amount that exceeds the tax liability shall be refunded.

Small employer health plans provided under the law would be subject to the various mandated coverages required for all other insurance plans in the state and could not impose a maximum aggregate amount on the benefits available through the plan.

Background

Proponents of H.B. 2090 commented that the changes made in the old law removes some of the barriers inherent in that law, makes participation easier for individual employers, increases the benefits available under the law, and increases the tax credit that may be available to employers. The bill was supported by the Insurance Commissioner, Blue Cross and Blue Shield of Kansas and Blue Cross and Blue Shield of Kansas City, Kansas Association of Health Plans, and the Kansas Employer Coalition on Health.

The bill was opposed by Smith Insurance Services.

The bill will have no fiscal impact in FY 2000, but will reduce State General Fund revenues in FY 2001 and FY 2002. The reduction in revenues is dependent upon the number of employers who participate and the number of employees who are eligible to be counted for the tax credit.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html.