There are plenty of backers in Congress for legislation that would allow the self-employed to deduct 100 percent of the cost of their personal and family health insurance even sooner than had originally been planned. Sen. Christopher S. Bond, (R-MO), chair of the Senate Committee on Small Business, is the number-one sponsor of the Self-Employed Health Insurance Fairness Act (S.343), which would increase the deductibility to 100 percent beginning this year. The self-employed health-care deduction now stands at 60 percent and is scheduled to reach 100 percent by 2003.
The bill also has a new twist: It would allow a deduction for the business owner even if he or she could obtain health insurance through a spouse, regardless of whether the business owner takes advantage of the insurance or not. Under current law, the self-employed lose all their health-insurance deductions if they are eligible to participate in another health-insurance plan.
Bond cites Steve Hagan, a financial planner in Mexico, Missouri, who runs his own small business, as an example. Although Hagan has established a group medical plan in his employees' benefits package, he can't currently deduct the cost of covering himself or his family because his wife is eligible for health insurance through her employer.
Supporters say Congress is likely to pass the measure, if not this year, then next.