Small businesses urged to take tax credits from health care act
CHAMPAIGN - As the Affordable Care Act marks its first anniversary this week, small businesses are being urged to take advantage of a key benefit that might send a little cash their way.
Small businesses that provide health coverage for their employees are eligible for new tax credits of up to 35 percent of the premium cost, but many mom and pop shops and other small employers may be failing to claim them on their tax returns this year.
"This is such great news for small businesses, but we're still struggling to get the news out," Marianne Markowitz, regional administrator for the U.S. Small Business Administration, said Monday.
The tax credits are available to employers of up to 25 full-time equivalent workers if the annual wages are less than $50,000 and if the company pays at least half the cost of single coverage.
The credits are intended to help make the cost of health insurance a bit more affordable for small businesses, and about 4 million small business owners were expected to be eligible to take them on their 2010 tax returns.
For 2010, nearly 1.2 million of the eligible small businesses the smallest firms paying the lowest wages were expected to be eligible for the maximum credit, according to research done by Families USA, a national health care consumers organization.
In Illinois, the organization projected 203,600 small businesses, or 78.5 percent, would qualify for a tax credit.
Sharon Whalen, publisher of Illinois Times, Springfield, says health coverage for nine employees costs that publication just over $27,000 a year.
The good news, she said, is she took advantage of the tax credit and it's worth about $2,700. And that money will help maintain long-term and short-term disability plans for employees. Small Business Majority, a national nonprofit organization representing 28 million U.S. small businesses, released a poll this week showing 57 percent of 804 California small businesses surveyed are unfamiliar with the tax credit.
What's more, the organization found, 62 percent have also not heard of state-established health insurance exchanges that will be established in 2014 to open up new marketplaces for employers and individual consumers to purchase more affordable health insurance.
Also beginning in 2014, the maximum tax credits will increase to 50 percent of premium expenses for coverage purchased through a state exchange.
The Small Business Majority has information about the tax credit and a calculator on this website: http://smallbusinessmajority.org/tax-credit-calculator/