Small-Business Tax Credits
Policy: Provides tax credits of up to 35% of employers' shares of insurance premiums they pay for their workers. Applies to companies with fewer than 25 workers and an average wage of less than $50,000 per year.
Caveat: Only companies with 10 or fewer workers or average wages below $25,000 per year are eligible for the full 35% credit, which is reduced for slightly larger small businesses or those that pay higher wages. The amount an employer can use to calculate their tax credit is capped at average insurance costs in their state, so there is no financial incentive for a small business to provide above-average insurance to employees that may cost more.
TBD: How many small businesses the credit will benefit. Only about 40% of businesses with fewer than 25 employees now offer coverage. While these businesses will certainly be helped, it's unknown how many small businesses paying relatively low wages will opt to begin offering coverage just because of this credit.