Cheap Health Insurance :Few Small Businesses Taking Advantage of Health Care-Related Tax Break

Author: admin, December 9th, 2011

Affordable Health Insurance NewsThe United States Treasury Department has released a report that shows very few small businesses interested in taking advantage of an incentive for offering health care benefits to their employees. Under the provisions of the Affordable Care Act, which

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Affordable Health Insurance News
The United States Treasury Department has released a report that shows very few small businesses interested in taking advantage of an incentive for offering health care benefits to their employees.

Under the provisions of the Affordable Care Act, which was signed by President Obama in 2010 and enacted the same year, certain small businesses would qualify for a substantial tax benefit if they meet a number of requirements. In order to qualify, the number of staff members employed must be less than 25, the average salary must of a full-time worker must be under ,000 per year, and the small business owner must pay -at the least- fifty percent or more of the staff’s health care insurance benefits.

The Treasury Inspector General found that only about 228,000 tax filings from small businesses claimed the tax break. The Internal Revenue Service (IRS) made a considerable effort to reach out to potentially qualified business taxpayers; more than 4 million postcards were mailed to businesses in general to inform them of the new tax break. A more precise number of small businesses which would be eligible for the tax credit has not yet been determined by the IRS.

While the Congressional Budget Office had calculated that billion would be utilized to absorb the cost of the tax credit in 2010, less than 0 million have been claimed. The report from the Treasury Inspector General recommends that the IRS should take a more proactive stance on their education and outreach efforts for small business owners. For their part, the IRS has agreed to create focus groups with attorneys, accountants and tax preparation professionals to come up with ways to increase awareness of the tax credit.

In a response to the Inspector General’s report, the Treasury has commented that since the enactment of the Affordable Care provisions took place in mid-2010, it is possible that many small business owners decided not to pursue the tax credit right away. The small business “tax season” typically takes place in September and October, and many business owners wait until the beginning of a new year to make decisions related to health insurance benefits for their employees.

The number of insurance-related tax credit claims made by small businesses is expected to climb in the future, and the Congressional Budget Office has stated that more than billion has been set aside for this purpose. It isn’t clear how other general health care reform provisions will affect the tax credit once they go into effect.

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