Health Care Reform Features Tax Credits For Businesses

by Cindy Crone, Arkansas Insurance Department  on Monday, Aug. 12, 2013 12:00 am  

Cindy Crone

Many businesses have viewed the 2010 Patient Protection and Affordable Care Act (PPACA) with concern, focusing on the tax penalties in the law for those that don’t provide insurance; however, the benefits far outweigh any potential penalties.

The Patient Protection and Affordable Care Act provides real safeguards that help business owners get better value for their premium dollars. Premiums can’t be increased because of employees’ health. The law requires most residents to have healthcare coverage by 2014, either through their employer or through individual coverage. Businesses with fewer than 50 employees are not required to provide insurance coverage.

When the Health Insurance Marketplace opens Oct. 1, consumers and businesses can shop for and purchase quality health plans approved by the Arkansas Insurance Department. Businesses can shop and compare plans through the Small Business Health Options Program (SHOP), which is designed to simplify the process of finding health insurance for employers and their employees.

The Affordable Care Act levels the playing field between small and large business owners. For example, if businesses have fewer than 50 employees and choose to offer insurance, they will be able to get better rates than today when small businesses are paying approximately 18 percent higher rates than large businesses.

The Small Business Health Care Tax Credit significantly helps businesses by offsetting some of the cost increases that may come with providing quality, affordable health insurance to employees.

The credit is claimed on the business’ tax return.

To be eligible for this credit, a business must:

• Have fewer than 25 full-time equivalent employees.

• Cover at least 50 percent of the premium cost of an individual plan for employees.

• Pay average wages of less than $50,000 a year.

In addition to tax credits, business owners can continue to receive tax deductions for what they pay toward premiums, offering real financial savings as well as human benefits for a small employer. Potential employees value coverage and it’s a value to employers when they offer health insurance. Businesses would have the value of healthier employees meaning less absenteeism and greater productivity.

Of some concern for some business owners was a reporting requirement in the law that called on businesses with 50 or more employees to provide detailed information regarding employees’ tax information and related health insurance benefit details. Failure to comply would have led to penalties. Earlier this month, the federal government postponed that mandate until 2015 to allow time to streamline reporting requirements.



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