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President Barack Obama's proposal to expand and simplify a small-business health care tax credit program could help some 150,000 small-business owners in New Jersey stave off rising coverage costs, according to a report by the U.S. Department of Health & Human Services.
"While the Affordable Care Act will bring down costs in 2014, something must be done to bring down costs right now," said Karen Mills, Small Business Administration administrator, in a media conference call today. "The sooner (the proposal) is implemented, the more small-business owners will benefit."
The tax credit extension is part of Obama's fiscal 2013 budget plan.
On average, it costs a small-business owner 18 percent more to offer employees the same health care coverage as large businesses, and health insurance premiums have gone up three times faster than wages in the past 10 years, according to a report
According to Liz Fowler, special assistant to the president for Healthcare and Economic Policy, 360,000 U.S. small-business owners claimed a total of $278 million in tax credits under the Affordable Care Act's tax credit program in 2010. If the proposal to expand the program is enacted, an estimated 500,000 employers that provide health care to 4 million employees will receive a share of an additional $14 billion in tax credits over the next decade. For one small-business owner, that could mean tens of thousands of dollars in tax cuts, Fowler said.
Under current law, health care tax credits are available only to businesses employing less than 25 full-time workers, and the credits require that employers claiming them contribute the same percentage of each employee's health coverage cost. If passed, Obama's proposal would double the ceiling to 50 full-time employees, raise the wage limit per employee to $50,000, adopt a phase-out program for firms within that limit, and eliminate the uniformity requirement and a cap based on state average premiums.
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