The White House hopes more small-business owners would take advantage of its expanded $14 billion healthcare tax credit plan outlined in President Barack Obama's fiscal 2013 budget proposal by better publicizing the incentives and simplifying the application process.
White House pushes healthcare tax credit
The proposal increases the number of businesses eligible for the tax credits, allowing firms with 50 or fewer employees to qualify. The current standard allows eligibility for firms with 25 or fewer and offers tax credits that cover up to 35% of employee premiums. That will increase to 50% in 2014. Karen Mills, administrator of the Small Business Administration, outlined the new plan for companies that provide health insurance for workers during a conference call Thursday with reporters.
“We need to make it easier for small-business owners to provide insurance to their employees right now,” Mills told reporters.
For example, the White House said a business with 30 full-time employees with average annual salaries of $25,000 and an employer premium contribution of $5,000 per employee would not be eligible for tax credits in fiscal 2012 under existing rules. But with the new changes, the same business would receive $35,000, and in 2014 it could receive $50,000 in credits.
There are other tweaks in the president's plan. It includes changes in the phase-out schedule, allowing all companies with 50 or fewer workers and an average annual salary of $50,000 to be eligible for credits. The existing rules offer tax credits to 360,000 small businesses, covering 2 million workers.
White House officials stressed that receiving tax credits would be easier under the plan, as the proposal nixes the requirement forcing employers to match their premium contributions with the credits received. The plan also eliminates the cap-limiting contributions tied into the cost of the average state premium.
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