An Act To Provide a Tax Credit to Employers Who Contribute to Employee Health Care Benefits
Maine Legislature, Session 121, LD 1135
Committee: Taxation
Sponsors: McLAUGHLIN, BROMLEY, BLISS, BOWEN, DUDLEY, HUTTON, NORTON, TRAHAN, CARPENTER, MARTIN
Amends: 36 MRSA §5219

Legislative Document 
No. 1135 
H.P.838 
House of Representatives, March 4,2003 
An Act To Provide a Tax Credit to Employers Who Contribute to 
Employee Health Care Benefits 
Reference to the Committee on Taxation suggested and ordered printed. 
7Jf~ 
frJ.1JJdL:~ 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative McLAUGHLIN of Cape Elizabeth. 
Cosponsored by Senator BROMLEY of Cumberland and 
Representatives: BLISS of South Portland, BOWEN of Rockport, DUDLEY of Portland, 
HUTTON of Bowdoinham, NORTON of Bangor, TRAHAN of Waldoboro, Senators: 
CARPENTER of York, MARTIN of Aroostook. 
Printed on recyc led paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §5219-0, as amended by PL 2001, c. 396, §39, 
is further amended to read: 
§5219-0. Credit for health benefits paid 
1. 
Credit allowed. 
A taxpayer constituting an employing 
unit that employs 10 or fewer 
1:aa~--§ employees is allowed a 
credit to be computed as provided in this section against the tax 
imposed by this Part, subject to the limitations contained in 
subsections 3 and 4. 
The credit equals the lesser of 20°'0 of 
aepeRaeR1: health benefits paid with respect to the taxpayer's 
lew-iRgelfle employees or dependents of employees under a health 
benefit plan during the taxable year for which the credit is 
allowed or $l69 $1,000 per lew-iRgelfle employee or dependent of an 
employee with aepeRaeR1: health benefits coverage. 
A taxpayer who 
received a credit under this section in the preceding year and 
whose number of lew-iRgelfle employees is a--e£ more than 10 may 
continue to receive the credit for 2 years after the last year in 
which the number of employees was 10 or fewer 1:aaR-9. 
2. 
context 
Definitions. 
As 
used 
in 
otherwise 
indicates, 
the 
this 
section, 
following 
terms 
unless 
have 
the 
the 
following meanings. 
A. 
"Dependent" means a dependent, as defined by Section 152 
of the Code, who is under 19 years of age. 
B. 
"J;)epeRaeR1:-aeal1:a Health benefits" means health benefits 
and health insurance costs allowable as deductions to the 
employer under Section 105 of the Code, paid by the taxpayer 
on behalf of the taxpayer's lew-iRgelfle employees for the 
benefit of the employees or the employees' dependents. 
C. 
"Employing unit" has the same medning as in Title 26, 
section 1043. 
D. 
"Health benefit plan" means a plan that: 
(1) Includes comprehensive coverage for at least the 
following range of benefits: 
(a) 
Inpatient and outpatient hospital services; 
(b) 
Physicians' surgical and medical services; 
(c) 
Laboratory and x-ray services; and 
Page l-LR1333(1) 
" 
r 
(d) 
Well-baby 
and 
well-child 
care, 
age-appropriate immunizations; 
including 
(2) 
Affords coverage that has an actuarial value no 
less than 80% of the actuarial value of coverage that 
is provided to employees of the State. 
For purposes of 
this paragraph, 
"actuarial value" means the expected 
cost of a benefit based on assumptions as to relevant 
variables such as morbidity, mortality, persistency and 
interest. 
When comparing the actuarial value of one 
benefit 
or 
package 
of 
benefits 
to 
another, 
both 
actuarial values must be based on the same assumptions; 
(3) 
Imposes 
copayment 
and deductible costs 
on the 
employee that do not exceed 10% of the actuarial value 
of all benefits afforded by the plan; and 
(4 ) 
for 
Makes the 
the benefit 
same 
of 
or 
the 
who are under 19 years of 
comparable 
employee's 
age. 
coverage available 
dependent children 
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3_ 
Qualifications. 
A taxpayer may claim the credit allowed 
by this section only for those periods during which the following 
conditions are met: 
p.. 
The taxpayer maintains a health benefit plan that is 
available to all of the taxpayer's ±sw-iaesffie employees who 
have been employed for 30 days or more on a schedule that 
exceeds either 25 hours per week or 1000 hours per year; 
B. 
The taxpayer pays at least 80°0 of the cost of health 
insurance coverage for each ±sw-iaesffie employee who is under 
the health benefit plan; 
C. 
±se 
If 
a 
claim 
is 
based 
on 
health 
benefits 
for 
dependents of employees l 
the taxpayer pays at least 60°'0 of 
the cost of dependent health benefits for children under 19 
years of age who are covered under the health benefit plan 
and who are dependents of a-±9w-iae9ffie an employee; and 
D. 
The taxpayer submi ts documentation from the insurer of 
the portion of the cost of benefits attributable to coverage 
of dependents that qualifies for a credit under this section. 
4. 
Limitations; carry-over. 
The amount of the credit that 
may be used by a taxpayer for a taxable year may not exceed 50% 
of the state income tax otherwise due under this Part for that 
year. 
The unused portion of any credit may be carr ied over to 
the following year or years for a period not to exceed 2 years. 
The credit allowable under this section may not be carried back 
to prior years. 
SUMMARY 
This bill expands the income tax credit for certain small 
businesses that provide health insurance covering the dependents 
of low-income employees. 
The credit is extended to employers 
wi th 10 or fewer employees, 
regardless of their income level. 
The 
credit 
is 
made 
applicable 
to 
expenditures 
for 
health 
insurance for employees as well as dependents, and the maximum 
credit per employee or dependent is increased to $1,000. 
..