Nonprofit Newswire | Health Care Reform Primer for Nonprofits

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March 23, 2010; Catholic News Service | It was sad to see the health insurance reform vote break down entirely on party lines. Remember that a number of Republicans crossed the aisle to vote for Social Security under FDR and Medicare under LBJ. But the nation’s conservative party, perhaps egged on by gatherings of Tea Party activists shouting occasionally vile, racist, and homophobic epithets, rejected any semblance of bipartisanship.

Even if the bill now proceeds apace, fending off the legal and legislative feints and tactics of the opposition, most of the pertinent provisions of the legislation will not take affect for some years—including pieces important to nonprofits. Assuming nothing huge happens to change the legislation that is heading to the President’s desk (the Patient Protection and Affordable Care Act), here are some nonprofit-specific provisions:

In 2010, nonprofit employers with less than 25 employees will be eligible for government subsidization of the costs of providing health insurance to their employees. The total subsidy—for nonprofit employers between 2010 and 2013, taken against the employer match for employee withholding for Social Security and Medicare—is capped at 25 percent of the organization’s health insurance costs (for-profits start at 35 percent). The average wage paid, however, has to be $50,000 or less. So it is possible that even many small nonprofit employers might not qualify for the subsidy.

  • In 2014, the cap on government subsidization of eligible small nonprofit employer costs rises to 35 percent (lower than the for-profit employer cap, which also rises in 2014). But that only happens if the nonprofits purchase insurance on state-established nonprofit exchanges.
  • In 2012, we will see the long-promised nonprofit insurance co-ops created and operating to compete with for-profit (and other nonprofit insurers). Why compete with other nonprofit insurers? The distinction, one hopes, is that the coops will be owned by patients and doctors.

As a commentator for the Washington Post noted, nonprofit status doesn’t mean that much among the major health insurers. The nonprofit Blues, for example, are raising their rates no less significantly than their for-profit competitors, and they pay their executives 7-figure salaries and raises even during the worst of the recession.—Rick Cohen

  • Patton Shaw

    I enjoy reading Mr. Cohen at times but his blatant partisan views in this article are about par for how most people think in the NFP world.
    Maybe, just maybe, the nation’s conservative party (Republican

  • Rebekah Basinger

    Do you know if churches are included in the nonprofit employers that are eligible for government subsidization for the cost of health insurance? Most congregations in the U.S. are less than 100 members and employ a single pastor and perhaps a couple of other people. Also, for the purposes of the $50,000 ceiling on wages paid, does a pastor’s housing allowance count toward that amount or is the ceiling based solely on cash salary?

  • rick cohen

    Dear Patton: thanks very much for your comment. I don’t view myself as partisan toward either party in this case, but partisan in favor of comprehensive health insurance reform. I think my earlier articles on this topic last year and this were pretty clear that I’m an adherent of the public option at a minimum. While I haven’t been blown away by some of the stumbling by the Dems on this, I think the Republican to-a-man-and-woman opposition to this is not good and puts them on the wrong side of the historical debate. Unfortunately, a piece of my article apparently was sacrificed to the editor’s knife, so you didn’t see one of my bullet points concerning the provisions that Senator Grassley got into the bill regarding getting nonprofit hospitals to be more nonprofit-like. In several columns, I’ve written very favorably about Senator Grassley–a Republican–because on the issue of nonprofit hospitals, I think he was much closer to being on the mark than the Democrats, who were lackluster participants in the Senate Finance Committee’s hearings on hospitals. By the way, I’ve always been pleased that the Quarterly has been consistent on Grassley, not like some other national nonprofit “infrastructure” groups that pandered to him when he was the chair of the Senate Finance Committee and tossed him to the curb when he was replaced by Senator Baucus as the chair.

    Sorry we don’t agree on this issue, but I really appreciate your taking the time to weigh in and give me what for. It’s what we at the Quarterly appreciate, even when our readers may not necessarily agree with what we have to say.

    Rick Cohen

  • rick cohen

    Dear Rebekah: I’m not a lawyer and don’t play one on TV, so don’t rely on me for legal advice. But my reading of the bill (or at least the section of the 2,390-page bill relevant to your question) refers to “tax exempt” employers. Since churches as employers are tax exempt, I assume that they would qualify exactly as nonprofits would, using the tax credit against their employer withholding, limited to the percentages I’ve described in this newswire, and limited to the average salary threshhold. Regarding what gets calculated as “wages”, the act refers to wages since that’s the basis against employers calculate withholding and apply the tax credit. So I’m guessing–only guessing–that a housing allowance would not be part of the wage calculation for this act, but I could be mightily wrong. Thanks for the question.