Report: Most small businesses qualify for health coverage aid
About 81 percent of Texas small businesses, or 248,700 of 4 million U.S. companies, are eligible for a federal tax credit this year to help them buy health insurance for their workers under the new health care law, according to a report released Thursday.
The provision targets companies with 25 or fewer workers who earn an average of less than $50,000 a year, said the report by Families USA, a national consumers group, and the Small Business Majority, an advocacy and research organization.
Tax credit amounts will vary based on the company’s size, but those with 10 or fewer workers who earn an average of less than
$25,000 a year are eligible for the maximum benefit — 35 percent off the cost of a small group plan. In Texas, 79,100 small businesses would qualify for the maximum this year, said the report, “A Helping Hand for Small Businesses: Health Insurance Tax Credits.”
The maximum credit for nonprofit employers is 25 percent.
“I think the tax credit is a great, great, great thing,” said Judy Fazzio, co-owner of 2 Chicks Grooming, a Cedar Park pet grooming business. “I don’t know how it could not be an enticement and a benefit for other small businesses.”
The tax credit is aimed at companies that have the hardest time affording health insurance, said Kathleen Stoll, deputy executive director of Families USA.
“It’s really (for) the small guy who is in the most need of help,” she said during a conference call with journalists Thursday.
The report said that, in 2008, businesses with fewer than 10 workers paid $350 more on average for each employee they covered than firms with 50 or more workers. And the smaller companies generally got less coverage for their money.
Nationally, 72 percent of businesses with 10 to 25 workers offer health coverage, the report said, versus 95 percent of businesses with 50 or more workers. Less than 46 percent of companies with 10 or fewer workers offered it, the report said. More than half of America’s uninsured people are small-business owners, their employees and family members, Stoll said.
The data show “there’s a crisis in small businesses offering insurance,” said John Arensmeyer, founder and CEO of the Small Business Majority. The program is “not a panacea,” Arensmeyer said, but “there is no downside.”
The organizations commissioned the Lewin Group to analyze data from the U.S. Census Bureau and U.S. Agency for Health Care Research to produce the report’s estimates.
Travis, Hays and Williamson counties have 32,208 small businesses with one to 20 employees, said Jim Rodriguez, president and CEO of TexHealth Central Texas, a nonprofit that is offering low-cost insurance to small businesses with contributions from Williamson and Hays county commissioners and Central Health, formerly the Travis County Healthcare District.
Rodriguez said the tax credit will make health coverage more affordable to companies.
Fazzio’s company is enrolled in TexHealth, and she and a co-worker are covered by it. Two other workers are covered by a spouse’s health plan, and a fifth worker has chosen to go uninsured, Fazzio said. She pays $249 a month for her coverage and matches $74.52 for half of the employee’s monthly share. If she can get the maximum 35 percent credit, Fazzio would pay $26.08 less per month for her employee. She is going to check with her accountant.
Not everyone will be able to afford it. David Levy, who owns Jake’s Natural Fine Foods along with his wife, said he doesn’t have the cash flow to offer health coverage at this time.
“I think, right now with the economy being what it is, it’s all we can do as really small businesses to merely survive the downturn.” Levy wrote in an e-mail. “Health care coverage would have to be considered a luxury at present.”
The report cites other provisions in the law that will help businesses buy insurance, including a website starting this month listing options for small-group coverage, with links starting in October for easy comparison shopping; health care exchanges in 2014 that will enable employers to buy insurance for workers in a simplified way; and an end to allowing insurers to charge employers higher rates if workers have pre-existing health conditions.
Judy Fazzio says a new federal tax credit for health insurance is ‘a great thing.’ She hopes it will help cover one of the employees at her Cedar Park business, 2 Chicks Grooming.
Tammy Leonelli works at 2 Chicks Grooming, which could get the maximum 35 percent tax credit to help cover health insurance costs for employees.