More Small Businesses To Provide Health Coverage to Employees
Hundreds of thousands of small businesses have begun providing health insurance to employees since the federal health reform law was signed, a trend that researchers tie to a tax credit in the law, the Wall Street Journal reports.
Details of the Provision
Under the law, firms that employ 10 or fewer full-time employees who have average annual salaries of less than $25,000 can receive a tax credit to cover up to 35% of a company's health insurance premiums. Employers with between 10 and 25 full-time workers with average salaries of $50,000 are eligible for a lower tax credit.
According to the White House, four million small businesses are expected to quality for the credit.
A September Kaiser Family Foundation survey found that the number of small businesses providing health insurance has increased. Nearly 60% of firms with between three and nine employees in 2010 offered health coverage to their employees, up from 46% in 2009.
However, the health reform law has been a double-edged sword for small businesses, some employers say.
Many employers have been hit by double-digit premium increases that insurers blame in part on new coverage mandates in the law.
According to the National Federation of Independent Business -- which along with 20 states has filed a lawsuit to overturn the law -- fewer than two million small businesses will end up using the credit.
Brad Close, NFIB's vice president for public policy, said the credit is "just too low an incentive to be helpful."
To further ease the burden on small businesses, the federal government might allow more businesses' health plans to qualify for grandfathered status, which would temporarily exempt them from new coverage mandates (Adamy, Wall Street Journal, 11/2).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.