Thursday, January 19, 2012

Small Business Health Rant

The reason I know that most politicians, Democrats and Republicans alike, don't REALLY care about small business is this, is political attitudes towards healthcare.

I've already gone on ad nauseum about insurance coverage, so I will spare you that, for now. Suffice it to say that, in a global marketplace, there is absolutely no way for American companies (who spend often 5, 10, even 25% of their budgets on health insurance for their employees) to compete with businesses in other countries who do not have that expense because they have single payer or government systems. I don't care how efficient your business model is, that's an almost insurmountable gap.

But my current issue is with HSAs. Since we are both self-employed, and Beatrix has yet to get a job, we have a personal health insurance plan through Medica. Premiums are $700/month currently, and we have a $6,000 deductible (that means we get to $14,400 before insurance starts kicking in, for those of you doing the math at home). We fund costs up to that deductible (and the 20% copay beyond it), through an HSA through Patrick's wonderful credit union, Spire.

So the idea behind an HSA is that it can be funded with pre-tax dollars. They can be funded by anyone; an employer can contribute to it if they have a high-deductible health plan, or individuals can contribute. They can be used to fund qualified medical expenses, ranging from copays to the amounts up to high deductibles such as above, to prescriptions — though starting last year, they disallowed over-the-counter medications like cough syrup. They also have a contribution cap, currently $6,250 for a family.

Now here's the issue. Like most consultants, we perform the service and then wait for the check to come in, often several months later. Thus, we treat our HSA almost like a bill — we fund it when we can, and then we often turn right around and pay the associated medical bill with it. But funding it is a real hassle. We have to go to the credit union, during regular business hours, go in, and physically make the deposit, so that the teller can code it correctly and, most importantly to the federal government, so we can sign to the effect that this is a legitimate contribution to the HSA. We can't deposit money via an ATM, or transfer funds into the account by phone or online, or even send in a deposit. Because the federal government is really afraid that, for this tax savings on $6,250 a year that is limited to specific medical expenses, we might fraudulently be putting money into the HSA and avoiding tax.

The result is, of course, that when we have a last-minute expense come up, like the glasses I wanted to purchase on sale yesterday or a doctor visit for a sick kid over the weekend, and there is not enough money in the account to pay for a variable and unexpected medical bill, we can't use the HSA to fund the allowed expense. (because let's face it, I would rather be working for a client and billing that hour in the middle of a business day than spending the time running to the bank).

(Meanwhile, this week, presidential candidate Mitt Romney admitted that his average tax rate was "closer to 15%," even on his book royalties and the $375,000 he made last year on speaking fees, much less his investment income.)

There's a lot of lip service being given to small businesses as the "backbone of the economy," and how entrepreneurship will be crucial to the country moving forward. But the cold hard truth is that there is very little attention paid to the issues that small businesses and sole proprietors face — healthcare and health insurance being top on that list. Until we take these things seriously, we're actively discouraging entrepreneurship in this country, and that simply MUST change.

ETA - Oh, and another barrier to work for many? Childcare. We just got approved for Ramsey County assistance and were put on the wait list. It's 3 years long at this point.

2 comments:

Robert Brown said...

Politicians only say they support small businesses because, "This will help small businesses create jobs," sounds better than, "This will help my corporate sponsors become even more fabulously wealthy."

What the government actually does is savagely punish anyone who dares to not work for one of their big corporate sponsors.

Anonymous said...

I will vote for you for president. -Sonja