FACT SHEET: Obama's budget expands, simplifies business health care tax credit
Released by The White House - Office of the Press Secretary:
Sheet: President Obama's Budget Expands, Simplifies Small Business Health Care
The Affordable Care Act includes a Small
Business Health Care Tax Credit to help small businesses afford the cost of
covering their workers. For tax year 2011 alone, the existing tax credit
will benefit an estimated 360,000 small employers who provide health insurance
to two million workers.
In his fiscal year 2013 Budget, President
Obama has called for expanding and simplifying the Small Business Health Care
Tax Credit. If the President's proposal is enacted, the tax credit would
benefit nearly half a million employers who provide insurance to four million
workers. Over the next ten years, the proposal would provide an additional $14
billion in tax credits. For a particular business, these changes could mean a
tax cut of tens of thousands of dollars. The President has proposed to:
Allow Small Businesses with Up to 50 Workers to Qualify
for the Credit: Currently the tax credit is only available
to employers with fewer than 25 full-time workers. (Part-time workers are
counted proportionally based on the hours they work.) The President's
Budget doubles this ceiling to 50. It also doubles – from 10 full-time
workers to 20 – the maximum size for a firm to receive the maximum credit
matching rate (which is currently 35% and increases to 50% in 2014).
Adopt a More Generous Phase-Out Schedule. The tax credit phases out based on both the average wage paid by the
employer and the number of workers it employs. The President's Budget
makes the phase-out schedule more generous and permits every otherwise eligible
firm that falls within the limits for size (50 full-time workers) and average
wage ($50,000 per full-time worker) to receive the credit.
Simplify the Credit by Streamlining the Rules. The President's Budget eliminates two requirements for claiming the
o "Uniformity Requirement." The Budget eliminates the
requirement that employers claiming the credit determine that they contribute
the same percentage of the cost of each employee's health insurance. This will
make the credit less dependent on the specific practices of the employer and
easier to claim. Employers would still be required to contribute at least
50% of the premium, ensuring a substantial commitment to their employees'
o Cap Based on State Average Premiums.
The Budget eliminates the cap that limits eligible employer contributions to
the amount an employer would have contributed if it offered the plan with the
average premium in the state – another requirement that can be complicated to
calculate and which is unnecessary given other incentives to control premiums.
Together, eliminating these requirements will
significantly simplify the process of claiming the credit.
Tuesday, June 18 2013 9:23 AM EDT2013-06-18 13:23:30 GMT
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