Benefits for Small Business in New Health Care Law

Booksellers should note that under the provisions of the Affordable Care Act qualifying small businesses can receive a tax credit designed to make the cost of covering employee heath care more affordable. More information about the tax credit is available on ABA's Bookweb.org.

The tax credit is one of the first health care reform provisions to go into effect and is designed to encourage small employers to offer employee health insurance coverage for the first time or maintain coverage they already have.

In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011.In addition, a qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible), and a qualifying employer must pay average annual wages below $50,000. Both taxable (for profit) and tax-exempt firms qualify.

Booksellers can find additional information regarding the small business tax credit -- including an online tax credit calculator -- from:

• The  U.S. Department of Health & Human Services' website, Health.gov
• The Internal Revenue Service's website
• The Small Business Majority's website

Healthcare.gov also provides a helpful video explaining more about the tax credit, and a New York Times article that describes how the tax credit helped the business of Betsy Burton, the co-owner of The King’s English Bookshop in Salt Lake City, Utah.

In addition, the Kaiser Family Foundation provides an informative website on health care reform, including an interactive timeline.

Here is a brief look at some of key small business items in the new healthcare bill:

• Small businesses that have up to 25 employees, pay average annual wages below $50,000, and provide health insurance, may qualify for a small business tax credit this year of up to 35 percent (up to 25 percent for non-profits) to offset the cost of their insurance. This will bring down the cost of providing insurance.

• Employer-based plans that provide health insurance to retirees ages 55 - 64 will be able to get financial help through the Early Retiree Reinsurance Program, which started in June 2010. This program is designed to lower the cost of premiums for all employees and reduce employer health costs.

• Starting in 2014, the small business tax credit goes up to 50 percent (up to 35 percent for non-profits) for qualifying businesses. This makes the cost of providing insurance even lower.

• Starting in 2014, small businesses with generally fewer than 100 employees can shop in an Exchange, which gives small businesses purchasing power similar to what large businesses have to get better choices and lower prices. An Exchange is a new marketplace where individuals and small businesses can buy affordable health benefit plans. Exchanges will offer a choice of plans that meet certain benefits and cost standards. Starting in 2014, members of Congress will be getting their health care insurance through these same Exchanges.

• Employers with fewer than 50 employees are exempt from new employer responsibility policies. They don’t have to pay an assessment if their employees get tax credits through an Exchange.

• As of 2011, provides grants for up to five years to small employers that establish wellness programs.