More Small Firms Starting Health Plans

Health care is a complex issue in the U.S., with a patchwork of private, public, and employer-sponsored health care plans that manages to leave some 50 million Americans without coverage every year. New data suggest that number may start to turn around, though.

A survey by the Kaiser Family Foundation and the Health Research & Educational Trust in September showed that 59% of small businesses with three to nine workers now offer health care, compared with 46% in 2009. It’s the highest number in the survey’s 12 year history and reflects an unprecedented year-to-year jump of 13 percentage points.

“We have seen some fluctuation in this category in the past but never of this magnitude,” the report states.

While the report does not go so far as to name a specific reason for the change, provisions of this year’s health reform legislation offer some strong possibilities. Chief among these, at least as far as small businesses are concerned, are the tax credits designed to help small businesses provide coverage for their workers.

Beginning this year, firms with 10 or fewer employees and with average wages per worker of up to $25,000 that pay at least half of employees’ health insurance will get a tax credit that covers 35% of their insurance premiums. In 2014, that will increase to cover 50% of premiums. Basically, small businesses employing low- to moderate-income workers will get a third back now, and a half back in 2014, of their health insurance expenditures.

The benefits won’t apply to small firms that pay their employees higher wages, but the guaranteed tax breaks are clearly an incentive for more small businesses to provide insurance.

The White House estimates that up to 4 million small businesses will be eligible for the credit if they provide care to their workers.

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