By Gene Meyer

(KansasReporter) TOPEKA, Kan. – One backer of a proposed plan to cut health plan costs for small business owners disputes a state claim the measure would cut tax revenues by more than $27 million.

The proposed plan, outlined in House Bill 2682 would cost Kansas nothing, Ken Daniel, a spokesman for the Topeka Independent Business Association, said in testimony submitted the Kansas House Taxation committee. That’s because business owners who would benefit from the plan already are writing off the cost of health coverage they offer now, as a business expense.  

HB 2682 is essentially a proposal that would allow Kansas small business owners to subsidize the cost of private health plans their workers might buy instead of either setting up a company plan, which is too costly for many, or declining to offer health plan benefits at all. The bill would allow participating business owners to deduct those payments from otherwise taxable income.

Proponents of the plan told tax committee members that the measure would provide badly needed affordable flexibility for the rapidly dwindling share of nearly 53,000 Kansas employers with fewer than 20 workers who can afford to offer medical benefits of any kind, and for an estimated 60,000 farm families who also struggle with private health care plan costs.

Opponents contend the plan is too costly. Kansas Department of Revenue analyst Richard Cram estimated in an analysis of the plan’s potential fiscal effects, that its wide scale adoption by Kansas business owners could cost the state $27.2 million in combination of lost premium tax revenues and reduced taxable income from business owners claiming the deductions. Costs could swell to $108.6 million if all Kansas businesses with health savings accounts or flexible benefits plans switched, Cram said.