In coming weeks, nearly every business in northern Nevada is likely to hear from its health insurance carrier and for once, the health companies won't be bringing bad news about premium increases.
The state's new tax bill provide a significant break for companies that provide health plans for their employees, and insurance companies will be making certain that their clients are aware of them.
The National Association of Health Underwriters says the new Nevada program appears to the first of its kind in the country.
Here's how its sponsors intend for it to work: Starting in October, the state will levy a payroll tax on businesses.
The rate initially will be 0.70 percent of the company's payroll, and the rate will decline to 0.65 percent in July 24.
When a company calculates its payroll, however, the state will allow it to deduct the amount paid for health coverage for its employees.
Say a company had a payroll of $60,000 a quarter.
It health plan cost $9,000 in those three months.
Rather than pay taxes on the full $60,000 payroll, the company will pay on $51,000 the payroll minus the health cost.
The difference isn't huge.
In this example, the tax bill is $420 a month for an employer without a health plan and $357 for an employer who provides coverage.
But the health insurance business believes it may tip the scales for some employers.
"Insurers are going to be swarming all these small businesses," said Larry Hardy, a Reno health insurance agent who follows legislative action closely for industry groups.
"If you have no insurance, you still have to pay the tax.
So why not give the money to your employees?"
Ed Hendricks of Hendricks & Associates Inc.
in Sparks said his firm plans to show employers how the new law will help offset higher premium costs or may even allow them to provide better health plans for their employees.
"I will put it in my employees' pocket every day before I'll send it to Carson City," he said.
Valerie Clark, executive vice president of Clark & Associates in Reno, said the state tax break may prove more important in convincing employers to keep current coverage in the face of rising premium costs.
Clark's message: "Before you gut your benefits, take a look at this." An employer's calculation of health costs, she said, now need to factor in both the state break and the federal income tax rules concerning a
business' health-plan costs.
Even if the measure reduces the amount Nevada officials collect from the new tax, legislators think the state still will be dollars ahead.
State Sen.
Randolph Townsend, a Republican from Reno, said lawmakers have been troubled in recent years from studies that show many of the new jobs in the state don't provide health coverage.
At the same time, he said, state officials increasingly have become aware that residents who don't have health coverage wait until problems grow serious and then head for an emergency room where services are particularly costly.
Hendricks stated the matter even more bluntly: "This tells me loud and clear that the state is paying for a ton of indigent care." Hardy said the insurance industry long has suggested similar measures to no effect.
"This time, someone finally listened," he said.
Townsend said much of the drive for the new measure came from Barbara Buckley, a Democrat from Las Vegas; Sheila Leslie, a Democrat from Reno; and leadership of the Culinary Workers Union in Las Vegas.
