government

Health tax credits for small businesses go unclaimed

Republicans criticize the Obama administration’s efforts to encourage more employers to offer insurance, but the White House has vowed to improve the program.

By Charles Fiegl amednews staff — Posted May 31, 2012

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

Few small businesses have taken advantage of new federal tax credits to provide health insurance coverage to employees, according to an analysis by the Government Accountability Office.

Republicans are blaming the Obama administration for pushing bad policy in the health system reform law that they say has proven to be ineffective. More than 170,000 small businesses have claimed credits to offset the costs of health coverage, but an estimated 1.4 million to 4 million employers could be eligible for the incentive.

“This GAO report confirms that many small firms haven’t claimed the tax credit because it is too complex and its temporary nature didn’t provide a significant solution to their long-term compliance problems — a regrettable but all too foreseeable conclusion,” said Sen. Olympia Snowe (R, Maine).

The GAO had reviewed tax records for 2010, the first year the credit was made available. Businesses with fewer than 25 full-time employees are eligible for the program. Employers must offer health insurance and pay at least 50% of premiums. Most small businesses did not qualify, as 83% of the employers did not offer health insurance in 2010.

“Furthermore, the small employers do not likely view the credit as a big enough incentive to begin offering health insurance and to make a credit claim,” the GAO report stated. “While some small employers could be eligible for the credit if they began to offer health insurance, small-business group representatives and discussion group participants told us that the credit may not offset costs enough to justify a new outlay for health insurance premiums.”

White House spokesman Nick Papas would not comment on the specifics of the report’s findings, but he noted the administration’s work and outreach to encourage businesses to participate. President Obama has asked federal lawmakers to reform the program so it would include larger companies. His 2013 budget proposal calls for the credit to be made available to businesses with up to 50 full-time employees.

Under current law, credits can be worth up to 35% of the employer’s share of premiums through 2013. The credit rises to 50% in 2014, and employers can receive a full subsidy if they have 10 or fewer employees.

Employers told the GAO that the process to claim the tax expenditure is burdensome, the report said. A tax form is used to calculate the amount of the deduction, which can take tax preparers up to eight hours to gather the necessary information and up to five hours to calculate. But one business owner and a nonprofit representative reported that they did not find the process overly burdensome.

“While the credit could be redesigned, such changes come with trade-offs,” the GAO said. “Changing the credit to expand eligibility or make it more generous would increase the revenue loss to the federal government.” The cost of credits claimed was $468 million in 2010.

Back to top


ADVERTISEMENT

ADVERTISE HERE


Featured
Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story


Read story

Goodbye

American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story


Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story


Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story


Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story


Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story


Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story


Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn