$100,000 'Buy Nhi' Mark 'Way Too Low'


Tribune Business Editor


The $100,000 National Health Insurance (NHI) exemption threshold for businesses is "way too low" and should be raised to $500,000, the Chamber of Commerce's chairman said yesterday.

Michael Maura told Tribune Business that the proposed annual revenue benchmark, below which companies will not have to buy the minimum NHI coverage for their staff, was "nothing" for most businesses given their typical turnover today.

Increasing this to $500,000 was just one of the recommendations detailed in the Chamber's just-released NHI position paper, which also called for the Government and NHI Authority to "do away" with the plan to require employers to pay 25 percent of the due premium on behalf of part-time staff whose primary employment lies elsewhere.

The private sector organisation, which represents the widest cross-section of Bahamian businesses and industries, then suggested that the Government abandon its January 2020 plans to roll-out NHI's employer mandate for companies with 100-plus employees and instead push the launch date for all back one year to January 2021.

Mr Maura, meanwhile, suggested that NHI be launched as "a pilot programme" so that its impact on businesses and the economy could be properly assessed, and any "mistakes" avoided.

He also questioned how healthcare quality and services are to be maintained at the existing level when all doctors, service providers and medical insurers will, according to Dr Duane Sands, minister of health, be required to take a cut in fees and compensation if NHI is to work.

The Chamber chairman explained that, in any business, the natural outcome from reduced income is a cut-back in services offered, yet the Government appeared to be expecting private sector healthcare providers to maintain their existing practices as is.

With the Chamber proposing multiple upgrades and enhancements to the NHI scheme, Mr Maura told Tribune Business: "We have suggested that the minimum threshold move from $100,000 to $500,000 in terms of businesses that have to comply.

"The reason for that is, in our view, that $100,000 in revenue is nothing. You could be a carpenter, have a helper, and you're at $100,000. I think it's way too low. We are respectfully proposing that number be in the $500,000 range for minimal compliance."

Such a move, if accepted by the Government and NHI Authority, would likely remove many small and medium-sized enterprises (SMEs) from the obligation of having to buy NHI's Standard Health Benefit (SHB), the minimum level of coverage, for their employees.

The Chamber's position paper said the $100,000 threshold was likely selected because it was the same benchmark required for VAT registration and Business Licence fee payment.

"It is noted that businesses with annual revenues below $100,000 would be exempted from the employer mandate, and therefore not required to purchase a Standard Health Benefit insurance plan for their employees," the Chamber said.

"It would appear that this threshold has been set at this level for two reasons: To make it such that virtually all businesses in The Bahamas would be subject to the mandate, and two, to be commensurate with the threshold required for business licensing and/or VAT registration.

"This approach would seemingly make it easier for the Government to monitor compliance. Conversely, implementing such a low threshold results in small businesses being subject to this mandate and strains an already vulnerable sector of our business community," It added.

"We are also concerned that this policy seems to be adopting the approach used for the Business Licence tax regime, which is based on revenues rather than profits...... The [Chamber of Commerce] recommends that the Government and NHI Authority consider increasing the exemption/exclusion threshold to annual revenues of $500,000. The Government is further encouraged to develop a taxation policy that reduces the regressive nature of our existing structure."

Suggesting that the Government adopt a less aggressive timetable for the revised NHI scheme's launch, Mr Maura said: "Is there potential, is it possible, to run a pilot programme that will help us to to understand how certain businesses and segments are supposed to operate under this regime, as opposed to launching day one and finding large gaps and mistakes?"

He also expressed concern over Dr Sands' assertion that NHI will not work unless medical providers take a fee cut, adding: "If someone comes to me as a businessman and said: 'We want you to continue doing what you're doing but you must reduce your costs, the only way to do that is to reduce the services you give.

"It doesn't seem realistic to go to the insurance industry or doctors and expect them to maintain the level of service they provide today but do it for less. I don't see how that's going to happen. The Chamber's perspective, if this is what you're trying to do, is how can you go to a business owner and tell them to cut the fees for your programme? How do you do that without compromising care?"

The Chamber's position paper, meanwhile, called on the Government to push back the NHI "employer mandate" launch one year until January 2021.

"Businesses have a real concern that 2020 may be too early for the implementation of the employer mandate given that consumers and businesses alike are still adjusting to the marked 60 percent increase in the Value-Added Tax (VAT) rate that took effect without any forewarning on July 1, 2018," it said.

"The substantial increase in the VAT rate remains a major hurdle to business, and the proposed mandatory NHI tax/levy/contribution will place an additional burden on many businesses.... The employer mandate is applicable either on January 1, 2020 or January 1, 2021, based on the number of employees within an entity," the Chamber continued.

"This seems an arbitrary threshold that presupposes that the size of a company's workforce is a predictor of its ability to bear this increased labour cost. The effort to monitor compliance with this threshold may also not be worthwhile since it will only be relevant for one year.

"The Government and NHI Authority may wish to do away with this aspect of the proposal and, instead, have all businesses subject to a January 1, 2021 commencement date for the employer mandate."

The Chamber position paper also called on the Government to drop the requirement that businesses pay 25 percent of the SHB premium for part-time staff whose main job was elsewhere.

The NHI Authority, in the scheme's consultation paper, said: "In cases where the employer may be exempt from contributing, the employer must still contribute 25 percent of the total standard premium (50 percent of the minimum employer contribution) for all employees directly to the NHI Authority and such employees are, of course, eligible for NHI. These payments are to be thought of as a contribution in lieu of providing their employees private insurance."

Disagreeing, the Chamber replied: "Employers are exempted from purchasing insurance for employees who have primary employment elsewhere (referred to as 'second employers'), but they are mandated to make a minimum contribution of 25 percent of premium.

"Recognising that these employees would have the purchase of their Standard Health Benefit (SHB) provided by their primary employer, it is unclear what the rationale is for this additional contribution. It is recommended that the Government and NHI Authority do away with this aspect of the proposal."

The Chamber also urged the Government to provide greater clarity on how the benchmark determining part-time employees, those working 15 hours per week or less, is calculated - meaning whether it is based on a monthly or yearly average of hours worked.

"According to the NHI Authority's policy paper, part-time employees will be considered as those who work less than 15 hours a week," the Chamber warned. "Greater clarity is required on, inter alia, how the 15 hours was determined and how the 15 hours will be calculated.

"Will this be based on a monthly or yearly average? Will there be a threshold to determine qualification based on employment periods or projects? How will the Department of Inland Revenue (DIR) and National Insurance Board (NIB) validate that an individual is no longer employed? How will this impact the Business Licence renewal process?"


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