Riley Health Proposal Appeals to Ala. Small Businesses

March 21, 2007

Chris Williams has to consider several factors when making decisions for his business. One of his most important decisions concerns health insurance for his employees.

Williams owns Leisure Creations in Russellville, Ala., a company that produces patio furniture for hotels and condominiums.

Williams said he didn’t offer health insurance for the first few years that he was in business, but about a year ago, he started paying half of his employees’ coverage.

“You really have to have it to hire good employees,” Williams said. “Most people want to at least have it available to them.”

Small businesses don’t have the bargaining power of larger employers and have seen their health care premiums increase as much as 40 percent in recent years.

As part of his Plan 2010 platform, Gov. Bob Riley is trying to give small business owners a break on health care costs.

Riley proposed a plan allowing business owners with 25 or fewer employees to deduct twice the amount they pay in health care premiums from their state income taxes.

Riley’s proposal to the Legislature would help business owners like Williams, who has about 20 employees.

“It could be an incentive for more employers to offer insurance,” Williams said.

Riley’s plan also would allow employees to deduct twice the amount they contribute toward their health insurance premiums from their individual state income taxes.

There are 651,000 Alabamians without health insurance.

“This commonsense proposal will help small businesses lower their health care costs and also encourage more small firms to offer health coverage to their workers,” Riley said in a statement. “That way, health insurance becomes more affordable for small businesses, and the number of Alabamians with health care coverage will increase.”

Michael Ricks, Alabama district director of the Small Business Administration, said Riley’s plan is a good first step.

“I think it will certainly increase the number of insured workers in the state,” Ricks said.

Ricks said health care coverage costs between $500 and $800 a month for each employee.

“Every dollar saved will help,” he said.

Riley hopes the plan would get more Alabamians insured.

“This strategic, targeted tax incentive will help small businesses struggling to cover their health costs and expand the number of Alabamians who have health insurance,” he said in the statement.

“Small business accounts for the majority of new jobs created in Alabama. So this plan helps keep our economy growing, which will bring even more revenue into the education trust fund.”

According to Census data from 2005, 14.4 percent of the state’s population does not have health insurance. It is estimated that 52 percent of those who work for small businesses are uninsured.

“The average small business owner in Alabama has five employees,” Ricks said. “Large companies are able to get in group coverage plans that make insurance more affordable, but small business owners can’t do that.”

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