Fewer businesses will offer employees health care coverage next year, according to a survey by a Vermont accounting firm.
Davis & Hodgdon Associates CPAs, a Williston-based firm that provides business tax planning, surveyed more than 100 small businesses with 50 or fewer employees across Vermont and found a projected 26 percent decrease in employer-offered coverage next year.
About 80 percent of the survey’s respondents said they offered health coverage in 2013 and about 54 percent of respondents said they plan to offer health coverage in 2014. However, about 10 percent of the businesses not planning to offer coverage intend to increase employee compensation.
The survey results come as small employers work to decide whether to offer their employees coverage as part of the state’s new health care exchange. The deadline to make that decision is Monday.
John Davis, president of Davis & Hodgdon Associates CPAs, said some employers are choosing not offer health coverage because individuals can obtain better plans and subsidies on their own. He said in some instances, it would be a “disservice” for employers to offer insurance.
The “drop-off” in coverage is likely the result of employer uncertainty, according to Jennifer Krause, assistant firm administrator at Davis & Hodgdon.
The week-long survey, released one week before employers will decide whether to offer health care coverage, was a response to businesses’ uncertainty with the online market place’s functionality, the current plans offered by Blue Cross Blue Shield of Vermont or MVP Health Care, and the dubious deadlines, Krause said.
Small businesses with 50 or fewer employees are required by law to buy insurance through Vermont Health Connect, the state’s insurance marketplace, or let their employees buy coverage on the exchange as individuals
Small businesses must make a decision whether to offer coverage by Nov. 25. Employers will decide whether they want to drop coverage, extend their current coverage until March 31, buy plans directly from an insurer or offer a plan through Vermont Health Connect, which still isn’t working properly.
If employers make no decision by Monday, insurers will automatically sign employers up for the plan that most closely resembles their current plan.
The survey was posted on the firm’s website, Facebook page, Twitter, LinkedIn profile, and sent out to their 5,000-person email list, Krause said. It received 131 voluntary responses.
Krause said the survey is not necessarily representative of Vermont businesses, however. Nearly half of the respondents were from Chittenden County and a plurality of the respondents were from professional technical businesses.
Only about 15 percent of the respondents stated they would “take advantage of health care tax credits.” Nearly one quarter of respondents said they did not know if they would.
Businesses with fewer than 25 employees that pay employees on average less than $50,000 annually are eligible for a tax credit, but only if they pay at least 50 percent of their employees’ health insurance premium. In 2014, companies can get a tax credit of up to 50 percent of premium costs; nonprofits qualify for a tax credit of up to 35 percent of premium costs.
Davis this small percentage is not surprising given the complicated process to apply for the tax credit. He said sometimes employers pay his firm up to $200 in application fees for a $250 annual tax credit.
“It’s certainly not enticing enough,” he said.
The respondents rated their experience with Vermont Health Connect as “undecided.” Businesses stated that the effect of enrolling employees through the state’s marketplace will be “slightly costly” to “costly” for their general business operations.
