Small businesses to benefit from health care reform

A new study shows small businesses that employ 16.6 million people could be eligible for tax credits afforded in the national health care reform law.

The credits are supposed to offset health insurance premium costs and help the businesses get and keep health insurance, according to the study by the Commonwealth Fund, an independent health policy research foundation.

And the credits are available this tax year, the first of the direct subsidies included in the law. Some 3.4 million workers are estimated to take advantage of the credit by 2013. The credits increase in value the next year, up from 35 percent of the employer’s premium contribution to up to 50 percent.

The relief is needed at these small businesses, according to the report, called Realizing the Potential of Health Reform: Small Businesses and the Affordable Care Act of 2010. Coverage provided from such firms has eroded over the last decade. While 98 percent of companies with 200 or more employees offer health insurance, only 46 percent of companies with fewer than 10 employees do.

Just over have of those who work for companies with fewer than 50 employees are uninsured or underinsured.

The report notes that the Congressional Budget Office estimates that small businesses could get $40 billion in credits in the next decade and reduce the premiums they pay 8 to 11 percent by 2016. Other provisions in the law will help reduce administrative spending and increase competition among insurers in the insurance exchanges that will be created, the report says.

“The Affordable Care Act is a big step forward for small businesses and their employees,” said Commonwealth Fund President Karen Davis in a statement. “Not only will business owners see immediate benefits from the tax credits, but owners and employees alike will be protected from steep premium increases and high out-of-pocket costs, ensuring they will have access to the stable, secure health insurance they deserve.”

The tax credits are determined by the businesses’ size and average wage. Employers must pay at least 50 percent of their employees’ premiums. The report says, for example, a firm with 10 or fewer workers with an average wage of $25,000 or less would qualify for the maximum 35 percent credit. Rules for applying for the credit are at

Will your business or employer apply?

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