By Jessica Borders
Times West Virginian
FAIRMONT —
According to Families USA, the new health insurance tax credit will provide “real and significant help” for small businesses.
Families USA, a consumer health organization, and Small Business Majority, a small business advocacy group, co-authored and recently released a report titled “A Helping Hand for Small Businesses: Health Insurance Tax Credits.”
Kathleen Stoll, director of health policy for Families USA, and Claire McAndrew, Families USA health policy analyst, wrote the study. The Lewin Group, a consulting firm, provided data analysis.
Families USA is a not-for-profit, nonpartisan organization headquartered in Washington, D.C., that works to make sure consumers have quality, affordable health care coverage. This entity, which is about 30 years old, brings a consumer perspective to debates at the national and state levels, Stoll said.
She said the publication, “A Helping Hand for Small Businesses,” was released over the course of July and includes specific West Virginia figures. The report focuses on the small business tax credit that is part of the Patient Protection and Affordable Care Act, which President Barack Obama signed into law in March.
“One of the benefits of health reform that is immediately available is the small business tax credit,” Stoll said.
Families USA wanted to get a sense of how many small businesses
might be eligible for a tax credit, which applies to employers with fewer than 25 workers and average annual wages under $50,000, she said. From this year until 2014, the tax credit will cover as much as 35 percent of what an employer pays to offer health insurance for workers. The tax credit will go up to 50 percent in 2014.
More than 4 million small businesses, or 83.7 percent, in the United States qualify to obtain a health insurance tax credit this year.
In West Virginia, 21,200 small businesses, or 90.3 percent, are eligible for this assistance. Of that number, 6,100 are small businesses with less than 10 workers that will be able to receive the maximum credit of 35 percent.
The number of businesses eligible for health insurance tax credits reflects the average salary and wages across the board inâWest Virginia, Stoll said.
“It’s a lot of businesses on main street,” said Stoll, who lives in West Virginia in the Berkeley Springs area on the weekends.
She said places in her area like the pet grooming store, artist shops, small grocery store with locally grown produce, used clothing store and day care center most likely meet the criteria. And throughout the state, small businesses like those could benefit from the tax credits.
“They’re all folks who could get help in providing insurance coverage to their workers,” Stoll said. “It’s the smaller businesses that struggle the most to provide coverage to those workers.”
Across the country, 46 percent of businesses with three to nine employees offered health insurance to their workers in 2009. That rate went up to 72 percent for entities with 10 to 24 workers, and more than 95 percent for companies with 50 employees and up.
Compared to large companies, small businesses are in a different insurance market that can be higher priced and don’t have the ability to leverage. Plus, the administrative costs can be more expensive as these small entities are trying to manage operations on their own, Stoll said.
In addition, these small firms can see premiums go up dramatically if just one worker has a serious illness, and it’s harder for them to plan for those costs, she said.
Stoll thinks the tax credit will help make a difference for small businesses that haven’t been able to offer health insurance in the past and those that stopped offering coverage as premiums went up.
“They want to offer coverage to their workers,” she said of the businesses. “They don’t want to lose that worker because they don’t offer coverage. Plus, they care about their workers.”
Small businesses that are already offering health insurance will also be able to benefit from the tax credit.
While the report looks at how many businesses are eligible, there is the issue of how many people will actually take advantage of the assistance. Really, small businesses have nothing to lose by participating, Stoll said.
“The small business tax credit is immediately available, but there is a lot more (in the Patient Protection and Affordable Care Act) that will help small businesses on the horizon for 2014,” she said.
In 2014, all the states will set up a federal exchange, or a regulated marketplace in which small businesses will be able to purchase health insurance that’s available to other small businesses. In the exchange, a small business or individual who buys coverage will not be penalized because of a pre-existing health condition.
West Virginians for Affordable Health Care is a public interest group that represents consumers and works on systemic health care reform issues, mostly public policy. This entity, located in Charleston, was formed in December 2005.
“We actually have one of the highest percentages of small businesses that will qualify in the country,” Perry Bryant, executive director of West Virginians for Affordable Health Care, said of the tax credits. “They have the potential to be of great benefit.”
The data from the report shows that almost all of the large employers provide health insurance to their workers, and small business employees are the ones that lack coverage, he said.
Bryant believes that Congress was right in targeting particularly those very small businesses, like local restaurants and neighborhood hardware stores, that may be having difficulty making ends meet in this economy.
“The small businesses struggle, and they need the additional assistance that these tax credits will offer,” he said.
To view the full report, visit www.familiesusa.org or www.smallbusinessmajority.org.
West Virginians for Affordable Health Care is online at www.wvahc.org. For more information about health insurance coverage, go to healthcare.gov.
E-mail Jessica Borders at jborders@timeswv.com.
