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Bagel Shop Gets Relief Thanks to Tax Credits

Matt Grove

Matt Grove
Bagel Grove
Utica, NY

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Our Research: Healthcare

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A Helping Hand for Small Businesses: Health Insurance Tax Credits

Publisher: Families USA and Small Business Majority
Published: July 2010

 
Introduction

Small businesses are the backbone of America’s economy. Across the country, there are nearly 4.8 million businesses that employ 25 or fewer workers. They’re your local diner, the hardware store down the street, and the mechanic in your neighborhood.

While small businesses have been serving us, however, our healthcare system has been failing them, making it difficult—if not impossible—to provide their workers with quality, affordable health coverage. Particularly for the smallest businesses, the cost of providing health insurance can be prohibitively expensive, especially in these tough economic times.

In the Patient Protection and Affordable Care Act, Congress and the President recognized that small businesses, particularly those with 10 or fewer workers, struggle to provide health insurance for their workers, and that some cannot afford to provide it at all. Legislators therefore included many provisions in the law to help small employers and their workers obtain high-quality, affordable coverage. One of these important provisions is a program to provide tax credits that small employers can use toward the purchase of health insurance for their workers. Starting this year, businesses with fewer than 25 workers and average wages of less than $50,000 will be eligible to receive a tax credit for the health insurance that they provide for their employees.

For this study, Families USA and Small Business Majority commissioned The Lewin Group to analyze data on business sizes and wages from the U.S. Agency for Health Care Research and Quality and the U.S. Census Bureau in order to quantify the number of employers who will be eligible to receive help from this provision. Lewin was then asked to use its Health Benefits Simulation Model to quantify the number of employers who will be eligible for the maximum tax credit.

 

Key findings

 

Conclusion

Targeting those businesses that are most in need, the small business tax credits and other critical provisions of the Patient Protection and Affordable Care Act will help make health coverage affordable and accessible for America’s small businesses. Employers who have postponed wage increases and sacrificed business growth in order to keep their workers covered, and those who have been forced to drop coverage altogether due to cost, will finally be able to provide their workers with the peace of mind that comes with health insurance. Not only will the credits ease the health insurance burdens experienced by existing small businesses, but they may spur the growth of new small businesses by allaying the concerns about health coverage that have discouraged some from starting a business until now.

The small business tax credits and the many other provisions of the Patient Protection and Affordable Care Act that will improve the health care system for small employers will help small businesses and their workers to be healthy and productive, both now and in the future.

A Helping Hand for Small Businesses: Health Insurance Tax Credits
Full report: NATIONAL STUDY Full report:
TAX CREDIT STUDY
Press release: NATIONAL STUDY Press release:
TAX CREDIT STUDY

 

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