More Affordable Tax Credits for Small Businesses

Six months after the health care reform was enacted, small businesses still deems to see the cost of health insurance to be a pressing issue. It is not until 2014 that the health care law can help small businesses to get affordable coverage. But to bridge the gap, the law established a bunch of significant tax credits for small firms beginning this year.

According to an analysis from the Commonwealth Fund, there are almost 17 million business workers that will be eligible for the tax credit between this year and 2013. For the credit to work, a firm must have workers not greater than 25 full-timers or a total number of hours worked by part-timers, pays an average annual wage of less than $50,000 and covers at least half the cost of health insurance premiums for their workers. Additional restrictions, however, include caps on the maximum premiums. The credit also works on a scale basis. For instance, businesses with 10 employees or less and paying an average wage of not more than $25,000 can max it out; while larger firms with higher payrolls can collect a reduced credit.

In perspective, the tax credit can cover up 35% of the expenditures by the qualifying firms starting this year until 2013. But the credit can boost up to 50% by 2014, and will be available for six years maximum. The tax credit is just a temporary solution until small firms can purchase on insurance exchanges. And though States will start the implementation of insurance pools in 2014, it might take two more years until every state can accommodate firms with up to 100 employees. It will be years before health reforms will be rolled out in full

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