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Small Businesses Eligible for 35% Health Care Reimbursement
The passage of the new health care law makes small businesses eligible for health care cost reimbursement. Business owners are wondering how the new law will help them save money and provide affordable health care to their employees. The White House released a fact sheet on last week that offers information on how the new law will work for small businesses.
Small businesses with less than 25 employees may be eligible for a tax credit that will cover more than one-third of their medical care costs for employees. The program, created under the new health care law, will allow businesses that qualify to receive reimbursement for 35 percent of their health care premiums.
In four years, the level of reimbursement will rise -- to fifty percent in 2014. The credit may also be applied towards dental and vision benefits. According to the Treasury Department, employers can claim the federal benefit even if they receive state tax credits for their insurance premiums. That is a plus for small businesses as it means that they can receive both state and federal tax credits.
The new health care law was signed in March by President Barack Obama. The Obama Administration estimates the new law will save small businesses $40 billion by the end of the decade. According to Karen Mills, head of the Small Business Administration, the new program will be popular among small businesses. Bloomberg reports that during a conference call on Thursday, Mills said:
We know that small businesses want it, because right now half of the small businesses between three and 10 people don't provide health care, and they're looking for it.
We will keep you posted as small business owners continue to adapt and react to the new system.
Related Resources:
- Tax Credit to Pay Third of Small-Business Health Cost (Update1) (BusinessWeek)
- Health Care Reform: Tax Changes for Small Businesses (FindLaw)
- What Will Health Reform Mean For You? (WhiteHouse.gov)