Supreme Court Decision a Victory for Small Businesses Looking for Relief from High Healthcare Costs

John Arensmeyer

John Arensmeyer

Statement originally issued on June 28, 2012:

The U.S. Supreme Court’s ruling today upholding the Affordable Care Act is a victory for small business owners who have struggled with the excessively high cost of health insurance for decades. The Affordable Care Act tackles small business owners’ top priorities when it comes to healthcare reform: cost and accessibility. The law will significantly rein in costs while providing more health coverage options for entrepreneurs.

Our opinion polling has found that small businesses support the law, believe healthcare reform is needed to fix the economy and they support key provisions, particularly the healthcare exchanges and tax credits. Many components of the law, including rate review and the Medical Loss Ratio provision, have already resulted in lower premium costs for small employers. It also help ends “job lock,” where a prospective entrepreneur who has a preexisting medical condition cannot leave their job, launch a new company or help grow the economy because they are locked in their job for health benefits. And in 2014 the law calls for health insurance exchanges to be set up in every state, which will do even more to curb costs and boost choice. State lawmakers who have blocked implementation must now step up to the plate and work with local small businesses to establish these new competitive marketplaces.

The political circus that has surrounded this law for the past two years hasn’t done anything to help small business owners struggling with high costs. Today’s ruling lets us get back to what’s important: implementing the law and getting small business owners the financial relief they’ve been waiting for.

Tax Credit Report: 7 in 10 Small Businesses Eligible for Combined $15.4 Billion in Healthcare Tax Credits

Huffington Post

Since the enactment of federal health care reform, hundreds of thousands of small business owners across the country have been able to claim a tax credit for offering their employees health benefits — and millions more are eligible, according to a report released today by advocacy group Small Business Majority and consumer group Families USA. For tax year 2011, seven in 10 small businesses with 25 or fewer employees are eligible for the credit.

But most striking is that the majority of entrepreneurs don’t even know this credit exists.

American small businesses employ millions of workers and create 65 percent of all net new jobs. They can be found in every pocket of the country, driving growth in metropolitan cities, suburban settings and rural towns. Small businesses hold an iconic position in the American consciousness — a position that sometimes makes it easy to forget how much they struggle to achieve that deserved recognition.

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New Report: Tax Credits Could Help up to 3.2 Million Small Businesses Provide Health Coverage for Their 19 Million Workers

John Arensmeyer

John Arensmeyer

Original statement issued May 9, 2012:

More than 19 million U.S. workers are employed by the 3.2 million small businesses eligible for $15 billion in tax credits in the federal healthcare reform, according to a new report released today. The tax credit helps small businesses pay for health coverage for their employees. A major obstacle to coverage, the report notes, is that many small business owners are unaware of these tax credits because of the noisy—and often misleading—debate over healthcare reform.

The tax credit program is outlined in a report released today by Small Business Majority and the consumer group Families USA. The report contains detailed information on the number of eligible employers and employees in each state whom the program could benefit. It also includes the total dollar amount of tax credits that could be provided to businesses in each state.

In general, businesses that offer health coverage and employ fewer than 25 full-time middle-class workers are now eligible to receive a tax credit of up to 35 percent of the cost of premiums for their workers. In 2014, the size of the credit will increase to cover up to half of the cost of health insurance provided to workers.

The tax credit was included in the Affordable Care Act to help the smallest businesses offer coverage—those who traditionally have the most difficult time doing so. In 2011, only 71 percent of small businesses with 10 to 24 workers offered coverage to their workers; among small businesses with fewer than 10 workers, only 48 percent offered coverage. By contrast, 99 percent of businesses with 200 or more workers offered coverage.

The following are among the key findings of the report, titled “Good Business Sense,” about small business employers. (The report itself also contains state-specific data.)

  • More than 3.2 million small businesses (70.1 percent of businesses with fewer than 25 workers) are eligible for tax credits to help with the cost of health insurance coverage for their workers for the 2011 tax year.
  • More than 1.3 million small businesses are eligible to receive the maximum tax credit when they file their 2011 taxes.
  • More than two in five (40.3 percent of) small businesses eligible for a tax credit are eligible to receive the maximum tax credit when they file their 2011 taxes.

The following are key report findings about U.S. workers. (The report itself also contains state specific data.)

  • Nearly 19.3 million Americans are employed by a small business that is eligible for a tax credit for 2011.
  • Of these workers, nearly 5.8 million are employed by a small business that is eligible for the maximum credit.
  • The total value of tax credits available to eligible small businesses for 2011 is more than $15.4 billion, an average of $800 per worker.
  • The total value of tax credits available to small businesses eligible for the maximum credit is more than $6.1 billion, an average of $1,066 per worker.

The report also contains state-specific data by race and ethnicity on the number of workers who can benefit from the tax credits. As the report makes clear, however, workers and employers can only begin to benefit when they become aware of the tax credit program.

Among small businesses with low-wage workers, the likelihood of offering coverage is even lower. As a result, lower-wage workers employed by small businesses are much more likely to be uninsured than other working Americans.

We know from our opinion polling that small businesses want to offer their employees coverage but many of them can’t afford it. The tax credits will make it easier for small businesses to offer coverage, which makes their businesses more competitive and boosts their ability to create jobs and drive economic growth.

“Small businesses seeking to provide health coverage for their employees have traditionally faced health insurance premiums that are significantly higher than those for large businesses,” said Ron Pollack, executive director of Families USA. These high premiums are due to higher administrative costs and premiums per employee in the small group insurance market, he said.

“The tax credit program, a provision of the Affordable Care Act, now makes it possible for small business to compete with large employers,” Pollack said. “This is great news for these small companies, who can now offer health benefits when competing for talent in the job market. Just as importantly, it’s great for workers and their families who will now have access to affordable health care.”

“We also know from our polling that the majority of small businesses don’t know these credits exist to help them,” Arensmeyer said. “The best way to serve small business owners is to educate them about this provision so they can participate in and benefit from it.”

Families USA and Small Business Majority contracted with The Lewin Group to develop the estimates used in the report. The full report, “Good Business Sense: The Small Business Health Care Tax Credit in the Affordable Care Act,” is available at http://www.smallbusinessmajority.org/small-business-research/downloads/050912_Small_Business_Healthcare_Tax_Credit.pdf.

Don’t Forget About the Small Business Healthcare Tax Credit

John Arensmeyer

John Arensmeyer

Originally featured in The Huffington Post:

With tax day rapidly approaching, small business owners still have a chance to cash in on a health care reform provision reserved just for them: health care tax credits. The Affordable Care Act was designed to address one of small business owners’ most serious problems — a lack of access to affordable coverage. Since its enactment, employers across the country have been able to claim the credit and reinvest in their business. Nan Warshaw, owner of Bloodshoot Records in Chicago, Illinois, is one of them.

Nan was able to save nearly $6,000 with the Affordable Care Act’s small business tax credit in 2010, helping offset her group coverage cost. “We’re still filing our 2011 returns, but we anticipate saving nearly that amount again,” she said. “With us paying the full contributions for our employees’ insurance, it really is a relief to get some help with those costs — and this is certainly the first time we’ve been financially rewarded for looking out for their wellbeing.”

Nan is one of hundreds of thousands of employers already seeing her health care costs decrease with the help of the tax credits. According to national opinion polling we released in 2011, one-third of small business owners who currently don’t offer health coverage are more likely to start doing so because of them, and 33 percent of employers already offering it said they’re more likely to continue doing so.

Currently, businesses with fewer than 25 full-time employees who pay at least 50 percent of total premiums are eligible for a credit of up to 35 percent of their premium contribution. In 2014, that will jump to 50 percent. For a rough estimate of how much your business could save, check out Small Business Majority’s tax credit calculator.

In this tough economy small business owners are struggling to compete, and in some cases, just keep their doors open. Like some of the law’s other key components, the tax credits are intended to boost entrepreneurs’ bottom lines, bettering their chances of offering quality coverage. Some use it to become more competitive by bulking up benefits packages, while others purchase new equipment. Still others put it toward their employees’ share of premiums.

For Ron Nelsen, owner of Pioneer Overhead Door in Las Vegas, Nevada, the credit eased worries that group costs might spiral so far out of control that he’d be robbed of his commitment to offering insurance. “When I heard about the new health care law, I was relieved something was finally being done to help entrepreneurs like me,” he said. “In 2010, I got back $2,235 just for offering insurance to deserving employees. And this year, I received even more. Most importantly, I’m not thinking about having to tell the guys they’re on their own when it comes to health insurance.”

Nationally, 309,000 small businesses saved money through this provision in 2010. An even larger number should benefit this year. And research shows the uptake could be even greater. Our opinion poll found 57 percent of small business owners do not know about the tax credits. It’s time to change that. To help them, we must get the word out and do everything we can to make sure this important provision is taken advantage of. In this economy, every little bit helps.

Expanding and Simplifying Healthcare Tax Credit for Small Businesses Will Help Rein in Coverage Costs

John Arensmeyer

John Arensmeyer

Released February 16, 2012:

I joined Administrator Karen Mills, head of the U.S. Small Business Administration, and a Michigan small business owner on a tele-press conference today to discuss the expansion and simplification of the small business healthcare tax credit in the Affordable Care Act.

Since its enactment nearly two years ago, the Affordable Care Act has already helped many small business owners better afford health coverage. The healthcare tax credits have played an important role. However, the credit could be made even more robust—which is what the president proposed as part of his 2013 budget.

Already, the small business tax credits are helping thousands of small businesses better afford health insurance. Last year, we released national opinion polling that found one-third of small business owners who currently don’t offer insurance would be more likely to do so because of these credits.

Improving this provision will let more small businesses take advantage of an important tool to help rein in healthcare costs. What’s good for small business is good for the economy. Expanding the tax credit would save more small businesses money, which will do even more to stimulate our economic recovery.

Michigan’s Mark Hodesh, owner of 100-year-old Downtown Home and Garden in Ann Arbor, is one of many owners whose business has already grown thanks to savings from the credit. “I’ve offered my 11 employees health insurance for a long time in order to attract and retain talent. Thanks to the Affordable Care Act, I’m now being rewarded for doing so,” he said.

In 2010, Hodesh saved almost $9,000 with the credit—nearly 30 percent of his total premium contribution. “Knowing that I was getting the credit gave me the confidence I needed to hire a 12th employee, who turned out to be a big asset to my store. Previously unemployed, she’s also now an asset to the local economy as a taxpayer and consumer.” This year, Hodesh could qualify to receive about $9,800 if Congress adopts the expanded credit.

The healthcare tax credits were designed to ease the burden of small businesses’ skyrocketing healthcare costs so these firms can grow and hire. Unfortunately, our polling found 57 percent of small business owners do not know the credits exist. And from speaking with entrepreneurs and CPAs across the country, we’ve found that some small employers—although they might qualify for the credit—think it’s too complicated and bypass it entirely. The president’s budget would change that.

To view Small Business Majority’s economic and opinion research on healthcare reform’s impact on small businesses, visit our website: http://smallbusinessmajority.org/small-business-research/healthcare/index.php