SBA Chief Announces One-Page Form for Claiming Small-Biz Health-Care Tax Credit

SBA Administrator Karen Mills [pictured] just released an open letter to small-business owners, announcing a simple one-page form that we can use to claim the health-care tax credit for 2010. Following, is the text of her letter:

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December 2, 2010

Dear Small-Business Owner,

As I've traveled the country this year, I have heard from many of you who are looking forward to the new tax credits, health insurance exchanges, and other tools that will help you provide health insurance coverage to your employees as a result of the Affordable Care Act.

The most immediate benefit of the new law is a tax credit that will help America’s smallest employers and nonprofit organizations [fewer than 25 fulltime equivalent employees with average annual wages below $50,000] who have been hit hardest by premium increases in recent years. Today, I'm pleased to announce that the Administration is releasing a one-page form and instructions [available at http://bit.ly/SmallEmployers] on how to claim this credit for the 2010 tax year.

In addition, new guidance released today answers questions that many of you have asked related to: your current contribution arrangements, eligibility for certain religious institutions, and participation by multi-employer health and welfare plans. In each case, the Administration has worked to ensure that a broad range of small businesses can qualify.

These credits are available for tax years 2010 through 2013, and for any two years after that. Through 2013, the maximum tax credit is 35 percent of premiums paid by small employers, and 25 percent for eligible tax-exempt organizations. Beginning in 2014, those levels increase to 50 percent and 35 percent, respectively.

Importantly, these credits are just one of many benefits in the Affordable Care Act. Most notably, in 2014, firms with up to 100 workers will be able to pool their buying power and reduce their administrative costs by purchasing coverage through a health insurance exchange.

Finally, the new law strengthens America’s entrepreneurial spirit, overall. For example, it outlaws discrimination against those with pre-existing conditions, giving more Americans the ability to break out of "job lock" and start their own companies. The new law also prohibits insurance companies from dramatically increasing premiums for a small business just because one worker gets sick.

Overall, the Affordable Care Act is a critical tool that will help millions of small-business owners provide health insurance to people who you often consider to be members of your extended family -- your employees. As a nation, we owe you nothing less as you work to grow, create jobs, and lead us toward full economic recovery.

Warm regards,

Karen Mills
SBA Administrator

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GoodBiz113's Take
This latest move effectively underscores the Affordable Care Act's profound import to small businesses' short- and long-term financial and tax-reporting interests. Once again, the Obama Administration has demonstrated that it truly believes in the power of small businesses to propel America's economy, and has delivered on its promise to promote entrepreneurship and affordable access to health care.

SOURCE: HealthCare.gov, Internal Revenue Service, U.S. Small Business Administration
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New Report Highlights Specifics of How Health Insurance Reform Will Reduce Costs for Small Businesses

HHS Secretary Kathleen Sebelius [pictured] today released a new report, "Lower Premiums, Stronger Businesses: How Health Insurance Reform Will Bring Down Costs for Small Businesses." The report outlines the many ways in which health insurance reform will lower health care costs for small businesses, and is available now at HealthReform.gov [http://www.healthreform.gov/].

"Small businesses drive our economy and create jobs, but they are struggling as health care costs continue to rise," Secretary Sebelius said. "The high cost of care is making it difficult or impossible for these businesses to offer care or grow their business. Health insurance reform will bring costs down and give small businesses the relief they need."

The report notes:

* Small businesses, the backbone of job creation in our economy, are disproportionately burdened by the financial strains caused by rising health care costs. On average, small businesses pay up to 18 percent more than large firms for the same health insurance policy. This difference is due, in part, to high broker fees [which can be up to 10 percent of premiums] and health plan administrative costs that are three times those in the large-group market.

* In a recent national survey, nearly three-quarters of small businesses that did not offer benefits cited high premiums as the reason.

* Nearly half of workers covered by a small-business employer have insurance that limits the total amount that the plan will pay for medical care, and nearly one in 10 small-business workers have a health plan that does not offer prescription drug coverage.

* Workers in small firms are more likely to shoulder burdensome out-of-pocket health care costs. Thirty-six percent spent more than 10 percent of their household income on out-of-pocket medical expenses in 2007, compared with 27 percent of workers in larger firms.

Health insurance reform will bring down costs for small businesses by creating a health insurance exchange; providing a small-business tax credit; ending the "hidden tax" on small businesses that provide health insurance; and preventing arbitrary premium hikes. Reform will also ensure that Americans have stable, secure insurance coverage, limit out-of-pocket spending, and eliminate caps on benefits.

To learn more about how health insurance reform will benefit small businesses and read the complete report, visit http://bit.ly/LowPremiumsStrongBiz.

SOURCE: U.S. Department of Health and Human Services
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President Obama: Small Business Must Be at Forefront of the Recovery

In this week’s address, President Barack Obama spoke of how important small businesses are to the economy and described the steps his administration is taking to support them.

Health insurance reform will allow small businesses to purchase insurance for their employees through exchanges -- which will increase the quality of coverage while lowering the costs -- and reform will provide tax credits to those businesses.

To free up credit, the President called on Congress to increase the size of various SBA loans, and he announced that the administration will be making more credit available to the small local and community banks that many small businesses depend on.

Following, are President Obama's remarks:

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All across America -- even today, on a Saturday -- millions of Americans are hard at work. They're running the mom-and-pop stores and neighborhood restaurants we know and love. They're building tiny startups with big ideas that could revolutionize an industry -- maybe even transform our economy. They are the more than half of all Americans who work at a small business, or own a small business. And they embody the spirit of possibility, the relentless work ethic, and the hope for something better that is at the heart of the American Dream.

They also represent a segment of our economy that has been hard-hit by this recession. Over the past couple of years, small businesses have lost hundreds of thousands of jobs. Many have struggled to get the loans they need to finance their inventories and make payroll. Many entrepreneurs can’t get financing to start a small business in the first place. And many more are discouraged from even trying because of the crushing costs of health care -- costs that have forced too many small businesses to cut benefits, shed jobs, or shut their doors for good.

Small businesses have always been the engine of our economy -- creating 65 percent of all new jobs over the past decade and-a-half -- and they must be at the forefront of our recovery. That’s why the Recovery Act was designed to help small businesses expand and create jobs. It’s provided $5 billion worth of tax relief, as well as temporarily reducing or eliminating fees on SBA loans and guaranteeing some of these loans up to 90 percent, which has supported nearly $13 billion in new lending to more than 33,000 businesses.

In addition, our health reform plan will allow small businesses to buy insurance for their employees through an insurance exchange, which may offer better coverage at lower costs -- and we’ll provide tax credits for those that choose to do so.

And this past week, I called on Congress to increase the maximum size of various SBA loans, so that more small-business owners can set up shop and grow their operations.

I also announced that we’ll be taking additional steps through our Financial Stability Plan to make more credit available to the small local and community banks that so many small businesses depend on -- the banks who know their borrowers, who gave them their first loan and watched them grow. The goal here is to get credit where it’s needed most -- to businesses that support families, sustain communities, and create the jobs that power our economy.

That’s why we enacted the Financial Stability Plan in the first place, back when many of our largest banks were on the verge of collapse. Our credit markets were frozen, and it was nearly impossible for ordinary people to get loans to buy a car or home or pay for college. The idea was to jump-start lending and keep our economy from spiraling into a depression.

Fortunately, it worked. Thanks to the American taxpayers, we’ve now achieved the stability we need to get our economy moving forward again.

But, while credit may be more available for large businesses, too many small-business owners are still struggling to get the credit they need. These are the very taxpayers who stood by America’s banks in a crisis.

And now it’s time for our banks to stand by creditworthy small businesses, and make the loans they need to open their doors, grow their operations, and create new jobs. It’s time for those banks to fulfill their responsibility to help ensure a wider recovery, a more secure system, and more broadly shared prosperity.

And we’re going to take every appropriate step to encourage them to meet those responsibilities. Because if it’s one thing we’ve learned, it’s that here in America, we rise and fall together. Our economy, as a whole, can’t move ahead if small businesses and the middle class continue to fall behind.

This country was built by dreamers. They’re the workers who took a chance on their desire to be their own boss. The part-time inventors who became the full-time entrepreneurs. The men and women who have helped build the American middle class, keeping alive that most American of ideals – that all things are possible for all people, and we’re limited only by the size of our dreams and our willingness to work for them.

We need to do everything we can to ensure that they can keep taking those risks, acting on those dreams, and building the enterprises that fuel our economy and make us who we are.

Thanks.

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The full video of President Obama's weekly address can be viewed online at: http://bit.ly/ObamaSmallBizRecovery

SOURCE: The White House
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Sebelius, Mills Release New Report, 'Insurance at Risk: Small Business Employees Risk Losing Coverage'

Secretary of Health and Human Services [HHS] Kathleen Sebelius [pictured] and Small Business Administration [SBA] Administrator Karen Mills today released a new report, "Insurance at Risk: Small Business Employees Risk Losing Coverage."

The report examines the health-care status quo that has left employees at risk of losing their insurance, and underscores the financial difficulties small businesses face when providing health insurance to their employees. The complete report, along with a list of sources cited, is available now at http://bit.ly/HealthReformSmallBiz.

"More Americans who work for a small business have lost their health insurance coverage, and those who still have coverage have seen their costs go up," said Sebelius. "Health insurance reform will drive costs down and make it easier for small-business owners to give their employees the quality coverage they need."

"The cost of health insurance is the No. 1 concern of small-business owners," Mills noted. "On average, small businesses pay 18 percent more than big businesses for the same health insurance policy. This has left small-business owners in an untenable situation, having to choose between their employees -- who are often like family to them -- and the bottom line. Health care reform will provide small-business owners with greater access to the affordable, quality coverage they want and need for themselves and their employees."

The new report notes:

* Employees of small businesses are 50 percent more likely to lose coverage as workers at large businesses. Half of workers in small firms that do not offer health benefits remain uninsured.

* Premiums for employer-based health insurance have more than doubled since 2000, rising three times faster than wages. As a result, fewer small businesses provide coverage for their employees. In 2000, 57 percent of firms employing fewer than 10 workers provided coverage. In 2009, only 46 percent of similar-sized firms provided coverage.

* In one national survey, nearly three-quarters of small businesses that did not offer benefits cited high premiums as the reason; and, on average, small businesses pay up to 18 percent more than large firms for the same health insurance policy. This is due, in part, to high broker fees [which can be up to 10 percent of premiums] and health plan administrative costs that are three to four times those in the large-group market.

Health insurance reform will stabilize health insurance coverage for Americans who work for small businesses, and provide small businesses with tax credits to help them provide health insurance for their employees. This will make health care more affordable for small businesses and their workers, solidifying and strengthening employer-based coverage for years to come.

Health insurance reform will also create a health insurance exchange, so that Americans without access to affordable insurance on the job can compare prices and health plans, and decide which quality affordable option is right for them. The exchange will also significantly reduce administrative costs for small businesses by enabling them to easily and simply compare the prices, benefits, and performance of health plans.

To learn how the current system has failed millions of Americans, and what President Obama’s Administration is doing to work with Congress to enact comprehensive health reform this year, check out these Web-based resources:

* Online Series on Health Reform: http://bit.ly/HealthReformOnline

* White House Reports on Health Reform: http://bit.ly/WhiteHouseHealthReform

* Health Insurance Reform Reality Check: http://www.whitehouse.gov/realitycheck/

* Video: "Reform Will Benefit Small Business -- Not Burden It": http://bit.ly/RealityCheckSmallBiz

* How Health Insurance Reform Will Help Small Business: http://bit.ly/HealthReformHelpSmallBiz

* Council of Economic Advisers Report, "The Economic Effects of Health Care Reform on Small Businesses and Their Employees": http://bit.ly/EconomicEffectsSmallBiz

SOURCES: U.S. Department of Health and Human Services, U.S. Small Business Administration, White House
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