The current health care reform was designed to give tax credits to small businesses. These credits are benefits for small employers who would like to offer health insurance to their employees. Many employers see this credit as a bonus and say they will use the money they save on health insurance for investment in their businesses and, possibly, employee raises.
Other businesses feel the credits will not help their companies that much because the credit is short-term; only six years. Many employers plan for the long-term with respect to their employees, so some feel that the short amount of time the credit is in place won’t be helpful to them.
Critics claim there isn’t enough of a benefit in affording health insurance to their employees. There are specific levels to this credit. On the higher end, companies with 10 or fewer full-time employees will get a 50% credit on the cost of coverage. Part-time employees will receive a prorated amount based on how many hours they work. Their wages must be less than $25,000, which is a difficult salary to live on without having to pay health care premiums.
Businesses with wages of $50,000 and at least 25 employees will be allowed a partial tax credit. Larger companies will not get any credit on their taxes.
The National Federation of Independent Business Owners and the U.S. Chamber of Commerce don’t believe these tax credits will help them to easily afford group health insurance for their employees. The U.S. Chamber of Commerce opposed the health care reform bill in Congress.
If a small employer qualifies for the credit and is able to pay half of the premiums, they are eligible to take the credit on next year’s taxes. It will be part of the general business credit.
What are your thoughts about the Small Employer Health Insurance Tax Credit?