Estimates are finally rolling out as to how many small businesses and employees may be helped by the small business health insurance tax credits under healthcare reform, and the outlook is cautiously hopeful. The Commonwealth Fund has issued a report which estimates that small businesses employing 16.6 million workers may be eligible for the tax credits. The health insurance tax credits are one of the first tangible benefits of the healthcare reform legislation for many business owners, and one which many small business owners have been counting on to help them on the road to economic recovery.
Because health insurers charge small businesses more than large businesses for the same health insurance coverage, only about half as many small businesses provide health insurance coverage for their employees (46%) compared to large businesses (well over 90%). The small business health insurance tax credits are designed to help small businesses pay for health insurance for their employees and rectify that situation.
Under healthcare reform, a small business may claim a federal tax credit worth up to 35 percent of what the business spends on health insurance for its employees. To qualify for the tax credits under healthcare reform, a small business must have fewer than 25 full-time employees, have average annual wages of $50,000 or less, and cover at least 50 percent of the cost of healthcare for its employees. The tax credits are calculated on a sliding scale, with the full 35 percent credit going to small businesses with 10 or fewer full-time employees and average annual salaries of $25,000 or less.
It is estimated byat by 2013, as many as 3.4 million workers may work in companies that take advantage of the small business health insurance tax credit.
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