Small businesses get tax credit for providing insurance
Donnie Reinhart, 52, worries about not having health insurance for his family. But he says he can't afford coverage through the individual market and his employer Phillip Patterson Painting in Louisville, Ky. — like many small businesses — doesn't offer it.
"We're not in the position where we could afford to start offering insurance," says Forest Ramsey, office manager at Phillip Patterson Painting.
That's even with a tax credit in the new health care law, effective through 2016, which aims to help companies with fewer than 25 employees to provide coverage.
"We hope the tax credits will help small businesses that currently offer insurance and also make it possible for small businesses that are considering offering insurance to do so," says Nicholas Papas, a White House spokesman.
But, responding to criticism the credit doesn't go far enough, he says it's only one part of the law that will help employees get covered. Another, the health insurance exchange, a government-regulated marketplace of plans, will offer small businesses and individuals a slightly less expensive option for buying insurance beginning in 2014.
Your guide to the federal health care law
Today, only 2.2 million of the 5.5 million U.S. companies with fewer than 25 employees offer health insurance, according to government data. Among employers who took an Angie's List poll, nearly half weren't sure how the tax credit will affect them.
"I work better when I see it all written down on paper," says Chris Benson, owner of GeeksAKnockin', which provides on-site computer support and offers coverage to full-time employees. Still, he's pretty sure his company will see some benefit when he files his 2010 taxes in 2011.
Michelle Dimarob of the National Federation of Independent Business says she thinks it's unlikely the credit will get a lot of businesses that currently don't offer insurance to start. But John Arensmeyer of the Small Business Majority, says with premiums more than doubling for small businesses over the last 10 years and fewer firms offering insurance, it can't hurt: "The numbers and the trends are so bad and so ominous for small business that this can only help."