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New
Report Shows 80.8 Percent of Texas Small Businesses Eligible for
Health Care Tax Credits
Report Finds More than 248,700 Texas Small Businesses Eligible for
Tax Credit in 2010; 79,100 Qualify for Maximum Credit
Washington, D.C.—More than 80.8 percent of Texas small businesses
with fewer than 25 employees will be eligible this year for tax
credits to help pay the cost of employee health coverage, according
to a new report issued by the consumer health organization Families
USA and small business advocacy group Small Business Majority.
The tax credit program, a key element of the Patient Protection and
Affordable Care Act, targets small employers with up to 25 workers.
In Texas, this means 248,700 small businesses will qualify.
Nationally, more than 4 million small businesses—83.7 percent—are
eligible in 2010 for the credit.
The report, “A Helping Hand for Small Businesses: Health Insurance,”
also notes that 79,100 Texas small businesses will qualify for the
maximum tax credit of 35 percent. These are businesses that employ
10 or fewer workers who earn an average wage of less than $25,000,
and traditionally have the most difficult time affording insurance.
“Many small businesses—like the local diner, the hardware store down
the street, or the neighborhood repair shop—face special challenges
in providing health coverage for their small number of employees,”
said Ron Pollack, Executive Director of Families USA. “They will now
receive substantial help.
“For example, in 2008, employers with fewer than 10 workers had to
pay, on average, nearly $350 more for each employee’s health
insurance than firms with 50 or more workers,” Pollack said. “It’s
no surprise, therefore, that less than half of these smallest
businesses offered coverage to their employees. This new tax credit
should certainly help to improve that record.”
“There’s been a lot of speculation about how many small businesses
will qualify for tax credits, and this report clears up a lot of
those questions,” said John Arensmeyer, founder and CEO of Small
Business Majority. “We now have real numbers that show the vast
majority of small businesses in Texas will qualify for tax credits
under the new law. That’s huge.”
Small businesses are financially less able to provide health
coverage for their workers than larger businesses. Nationally, 72
percent of small businesses with 10 to 25 workers offer health
coverage, while more than 95 percent of businesses with 50 or more
workers offer coverage.
The new law aims to redress that imbalance with tax credits,
offering the maximum credit of 35 percent to the smallest companies.
Nonprofit employers also benefit, with a maximum credit of 25
percent. As the number of employees and their average wages rise,
the tax credit is reduced on a sliding scale.
To further provide assistance, the law allows employers to count two
half-time workers as one full-time worker, meaning that an employer
with mainly part-time workers will be able to qualify for the tax
credit.
“Employers have been willing to provide health coverage for their
employees, but economies of scale have made this almost impossible
for many small businesses,” Pollack said. “Starting this year, they
will have access to a new tax credit to help provide this essential
benefit, enabling them to hire and keep good workers who want and
need health coverage.”
The report notes that the health reform law has additional
provisions to aid small businesses now and in coming years. Among
those provisions:
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Starting this month, small business owners are able to view all
existing health coverage options in their state on a user-friendly
website.
*
Starting in 2014, small employers will be able to purchase quality
coverage with strong consumer protections through state-based health
coverage marketplaces called “exchanges.”
*
Starting in 2014, small employers will be eligible for tax credits
up to 50 percent, or 35 percent for nonprofits, to cover their
workers with policies obtained through the state exchanges.
*
Starting in 2014, insurers will be prohibited from charging small
employers higher premiums based on their workers’ pre-existing
conditions.
“Our nation has counted on small business for personal, neighborhood
services and as a wellspring for economic growth,” Pollack said.
“The new health reform law will provide much-needed relief to these
businesses so they can provide health coverage for their workers.”
The full report on this health insurance tax credit program, “A
Helping Hand for Small Businesses,” is available at:
http://www.familiesusa.org/assets/pdfs/health-reform/Helping-Small-Businesses.pdf
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