(a) Inpatient and outpatient hospital services;

(b) Physicians' surgical and medical services;

(c) Laboratory and x-ray services; and

(d) Well-baby and well-child care, including age- appropriate immunizations;

(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) Makes the same or comparable coverage available for the benefit of the employee's dependent children who are under 19 years of age.

E. "Low-income employee" means a Maine resident whose average weekly earnings from the taxpayer do not exceed the State's average weekly wage as calculated by the Department of Labor.

3. Qualifications. A taxpayer may claim the credit allowed by this section only for those periods during which the following conditions are met:

A. The taxpayer maintains a health benefit plan that is available to all of the taxpayer's low-income 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% of the cost of health insurance coverage for each low-income employee who is under the health benefit plan;

C. The taxpayer pays at least 60% 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 low-income an employee; and

D. The taxpayer submits 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 carried 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.

Sec. 3. 36 MRSA §5219-S, as enacted by PL 1999, c. 731, Pt. V, §1 and affected by §2, is amended to read:

§5219-S. Earned income credit

A taxpayer is allowed a credit against the taxes otherwise due under this Part equal to 5% of the federal earned income credit for the same taxable year for tax years up to and including the tax year that begins on January 1, 2001.__This credit is equal to 10% of the federal earned income credit for the tax year that begins on January 1, 2002 and 15% of the federal earned income credit for tax years that begin on or after January 1, 2003. The credit may not reduce the state income tax to less than zero.

SUMMARY

This bill raises the minimum wage to $5.65 per hour starting January 1, 2002 and $6.15 per hour starting January 1, 2003.

It provides an income tax credit for an employer who employs fewer than 15 employees equal to the lesser of 20% of health benefits paid under a health benefit plan or $125 per employee with health benefits coverage.

It also increases the earned income credit to 10% of the federal earned income credit for the tax year that begins on January 1, 2002 and 15% of the federal earned income credit for tax years that begin on or after January 1, 2003.