Small firms find snags in health care tax break

Opinion polls show the Obama administration's new tax credit for health insurance is one of the most popular ideas in President Barack Obama's health care law. However, only 170,300 businesses out of a pool of as many as 4 million potentially eligible claimed it in 2010, about 4 percent.
By RICARDO ALONSO-ZALDIVAR Published: May 31, 2012
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Many small businesses struggle to afford health insurance for workers, but a new tax credit meant to help them seems to be turning into a disappointment.

Although opinion polls show the credit is one of the most popular ideas in President Barack Obama's health care law, only 170,300 businesses out of a pool of as many as 4 million potentially eligible claimed it in 2010.

A recent government report found the tax credit time-consuming to apply for and not rewarding enough to be financially attractive.

That's put the Obama administration in the awkward position of asking Congress to help fix the problems by allowing more businesses to qualify and making it simpler to apply. But Republicans who run the House say they want to repeal what they deride as “Obamacare,” not fix its flaws.

It doesn't help the administration's plea that the biggest small-business lobbying group is a lead plaintiff asking the Supreme Court to overturn the Affordable Care Act. The National Federation of Independent Business isn't likely to spend much time tinkering with the tax credit or promoting it to members.

Only about 30 percent of companies with fewer than 10 workers offer health coverage, and they often pay more for insurance than large businesses. The credit, which once had support from lawmakers of both parties, was supposed to help businesses already providing coverage afford the premiums.



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