Ann Winborne of the Alabama Department of Revenue answers questions about the new Small Business Health Insurance Premium Deduction Enhancement Bill.

Thanks to the Small Business Health Insurance Premium Deduction Enhancement Bill, Alabama business owners with fewer than 25 employees can deduct 150 percent of the amount they pay for employee health insurance premiums from their state income taxes, effective for the 2009 tax year. The plan also allows employees of small businesses earning $50,000 or less annually to deduct 150 percent of what they pay for health insurance from state income taxes. Ann Winborne from the Alabama Department of Revenue provides answers to several frequent questions about the new law.

If the business does not currently provide healthcare for part-time employees,
would they now be required to offer it to get the discount? No.

Does the 25-employee headcount include part-time employees? No. The count
should be for full-time employees.

Are the spouse and children of a sole proprietor counted in the number of
employees for qualification purposes for the employer? No.

Does the tax deduction apply for employers and their employees who choose to
participate in the Individual Blue plans or only for group health plan
participants? The law allows the deduction for amounts paid by qualifying employers
and by qualifying employees when health insurance premiums are paid as part of an
employer-provided health insurance plan. If the Individual Blue plans meet these
qualifications, then the deduction is allowable.

Does this premium deduction include dental and vision plans, along with
healthcare? The new law mentions healthcare premiums, but does not mention any
other type of plans. If the vision and dental plans are part of (included in) the premiums,
this should qualify.

Does the deduction require a specific deductible for the employer/employee?  No.