80% of American business firms employ fewer than 10 workers. Regardless of how you may feel about the wisdom of ‘The Affordable Care Act’, as a small business owner you may want to take advantage of real and immediate monetary relief from Uncle Sam: federal tax credits of up to 33% of the amount they you pay for your employees’ health insurance premiums.
Small businesses are eligible only if they employee fewer than 25 full time equivalent workers and these workers are paid an annual salary of $50,000, or less. The actual percentage credit is based on the number of workers and their average wages as well as other factors. This maximum tax credit increases to 50% of the premiums in 2014.
There will be other options available to small business as the plan is implemented. For example, in 2013 government grants will be available for up to 5 years to eligible employers to establish wellness plans for their employees.
In 2014 small businesses will be able to purchase insurance through competitive exchanges thereby giving them the same purchasing power as larger groups. If a small business is unable to afford health insurance beginning in 2014, your employees will be able to purchase their own in these exchanges and those employees may qualify for individual tax credits for affordable assistance. Exchanges must meet certain benefits and cost standards.
Most importantly, if your own small business already has satisfactory health coverage you don’t have to change a thing.
‘The Affordable Care Act’ contains several other tax provisions and regulations particularly directed to small businesses, some already in effect and others to be implemented during the next couple of years. Look for more information in this space in the following weeks.