Editor’s note: This op-ed is by Donna Sutton Fay, the policy director for the Vermont Campaign for Health Care Security Education Fund.
Vermont small businesses may be missing out on $45.64 million annually in health care tax credits available under the federal Affordable Care Act (ACA), according to a new report released by Families USA and the Small Business Majority.
The ACA provides for federal tax credits for small businesses with fewer than 25 full-time employees and average annual wages of less than $50,000. The report estimates that in 2011 Vermont had approximately 10,350 small businesses eligible for the credit, employing 47,200 workers. The average credit per worker is estimated to be $966 annually.
Despite what some groups have been saying, the Affordable Care Act is good for small businesses. This tax credit offers real money to small businesses struggling to provide health insurance for their employees.”
Despite what some groups have been saying, the Affordable Care Act is good for small businesses. This tax credit offers real money to small businesses struggling to provide health insurance for their employees. We hear from small businesses all the time who want to provide health insurance to their employees but who are not able to do so. This tax credit could really help them. It also could free up money that small business owners could use to reinvest in their business.
To qualify for the tax credit, the small business must pay for at least 50 percent of the employee’s health insurance premiums. The tax credit is worth up to 35 percent of the cost of the health insurance, increasing to 50 percent in 2014 when the health insurance exchange is up and running.
The tax credit is one tool the ACA offers small employers to make it easier to provide insurance. However, if they are not able to or chose not to, their employees will be able to buy insurance through the exchange. Small businesses do not have to pay a penalty if they do not offer insurance. Premium tax credits are available for income up to 400 percent of the federal poverty level (FPL) and cost-sharing subsidies are available up to 250 percent. Four hundred percent FPL is approximately $92,000/year for a family of four and $45,000 for an individual.
