Helping small businesses stay afloat
No matter your political affiliation or economic philosophy, most everyone can agree that small businesses play a major role in the growth and sustainability of the American economy. According to the Small Business Majority, the small business community:
“[I]ncludes 6 million small employers with 43 million employees and nearly 22 million self-employed people… Together, these entrepreneurs and other small business owners innovate, grow the economy and create jobs.”
Unfortunately, in recent years many small business owners have been faced with closing their doors, or no longer being able to offer health insurance to their employees. However, with the passing of the Patient Protection and Affordable Care Act, those worries will be a thing of a past, and much sooner than you may think!
Starting this year, businesses with 10 or fewer employees and annual average wages of less than $25,000 will be eligible to receive a 35 percent tax credit. The credit decreases as the number of employees and the annual average wages increase. It is eventually phases out at 25 employees and a $50,000 annual average wage. Nonprofit businesses are also eligible for credits starting at 25 percent. In order to participate, the business owner must pay at least 50 percent of the employee’s premium.
To find out whether or not your business is qualified and for how much, use the health care tax credit calculator at www.smallbusinessmajority.org/.
This system will only be in place until 2014, when the state-based exchanges are implemented. At that point, only small businesses that participate in the exchanges will be eligible for the credit, but the credit will be higher—up to 50 percent for private companies and 35 percent for nonprofits.
For many small business owners, the passing of health reform means they will finally have a chance to offer affordable insurance not only to their employees, but to themselves as well. Like Blake Anderson, the owner of a small construction company in Durham, NC:
“When he started Innovative Renovation three years ago, he explored buying coverage for himself, his business partner and the seven workers he had at the time. But when a broker told Anderson that his heart condition, which will require a valve replacement at some point, would make the insurance prohibitively expensive, ‘the conversation ended there,’ he says. Now he's taking another look.”
The past few years have been difficult on everyone, but they have been especially tough for small business owners. The introduction of this new tax credit will go a long way in helping many business owners finally provide for their employees and families in a way they were never able to do before.