BPW Foundation's Women Misbehavin' Blog

Well behaved women never make history

Small Business and Health Care Reform

Posted by espressodog on March 30, 2010

A lot of the stuff in the health care reform bill recently signed by President Obama does not kick in right away but one piece goes into effect RIGHT NOW – the Small Business Health Care Tax Credit.

The Patient Protection and Affordable Care Act (aka health care reform) does not require that small businesses provide coverage to their employees. Instead, there are tens of billions of dollars in new tax-credits to small businesses to make it easier for them to provide coverage if they choose to do so.

 The Small Business Health Care Tax Credit, which is effective immediately, can cover up to 35% of the premiums a small business pays to cover its workers.  In 2014, the rate will increase to 50%. And both small for-profit businesses and small not-for-profit organizations are eligible.

When Does It Go Into Effect?
NOW! The credit is effective January 1, 2010.  As a result, small businesses that provide health care for their workers will receive immediate help with their premium costs, and additional firms that initiate coverage this year will get a tax cut as well.

Who is Eligibile? 
Qualifying firms must have less than the equivalent of 25 full-time workers (e.g., a firm with fewer than 50 half-time workers would be eligible), pay average annual wages below $50,000, and cover at least 50% of the cost of health care coverage for their workers.

How Much?
For-profit small businesses: The credit is worth up to 35% of a small business’s premium costs in 2010.  On January 1, 2014, this rate increases to 50%.
Non-Profits:  Tax-exempt organizations are eligible for a 25% refundable tax credit in 2010.  In 2014, this rate increases to 35%.

How Long?
Firms can claim the credit for up to 6 years.

For Example: Foster Care Non-Profit with 9 Employees Gets $19,000 Credit for 2010

First Street Family Services.org:

  • Employees: 9
  • Wages: $198,000 total, or $22,000 per worker
  • Employee Health Care Costs: $76,000

2010 Tax Credit: $19,000 (25% credit)
2014 Tax Credit: $26,600 (35% credit)

The cost of providing health care is crippling businesses of all sizes, especially small businesses. Women-owned firms represent 30 percent of all U.S. businesses and are the fastest growing percentage of small business owners. Sixty percent of America’s uninsured are small business owners, workers and their families. Small business owners want to provide health care coverage to their employees because it helps with employee recruitment and retention, increases productivity and is the “right thing to do.” The driving force behind the erosion of health coverage for small businesses has been cost. The creation of new marketplaces to buy insurance on the state and regional level and tax credits to enable and encourage small businesses to provide employee health care coverage will improve the bottom line for everyone.

And, yes I have read the bill.

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