15,000 RI Small Businesses Eligible for New Health Care Benefit
Thursday, July 22, 2010
More than 82 percent of small businesses in Rhode Island may be eligible this year for tax credits to ease the cost of health insurance for their employees, according to a report released this week by national advocacy organizations Families USA and Small Business Majority.
“Many small businesses—like the local diner, the hardware store down the street, or the neighborhood repair shop—face special challenges in providing health coverage for their small number of employees,” said Ron Pollack, Executive Director of Families USA. “They will now receive substantial help.
The analysis, conducted by the Lewin Group, estimates that 15,700 small businesses in Rhode Island stand to benefit from the new tax credit established by federal health reform.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTEmployees of small businesses may benefit as well. “With insurance rates going up 10-15 percent every year I haven’t been able to give my employees the pay raises they deserve,” said Robert Cagnetta, owner of Heritage Restoration in Providence. “This tax credit will help me maintain health insurance as an affordable option for my business."
Under the new health care reform law, large employers face penalty if they do not provide affordable health insurance to their employees. Small businesses will not be subject to any penalties. Instead, they receive a tax incentive to cover a portion of the cost of health insurance for their employees.
To qualify for the incentive, businesses must have 25 full time employees or fewer, have salaries less than $50,000, offer health insurance to employees, and contribute at least 50 percent of the premium.
For tax years 2010 to 2013, qualified small employers will receive a tax credit worth up to 35 percent of the amount they contribute to health insurance. The total value of the tax credit will be determined on a sliding scale. The smallest employers, with 10 or fewer employees and average earnings of $25,000 or less, will receive the largest tax credits.
The study estimates that 3,900 Rhode Island employers will qualify for the maximum credit amount. Small Business Majority offers a calculator for employers to estimate their tax credit value. Click here to use it.
“Rhode Island small businesses have been struggling for years to provide essential health benefits for their employees,” said Hannah Watson, a health care organizer with Ocean State Action. “This is a major step forward to ensure that all working Rhode Islanders have access to quality, affordable care.”
Beginning in 2014, small businesses will need to purchase insurance coverage through a newly established health insurance exchange to maintain their eligibility for the tax credit.
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