Health care reform offers tax breaks to small business

WASHINGTON — Nearly 90 percent of Utah's small businesses — companies with fewer than 25 employees — are eligible for tax credits this year if they start offering health insurance to their employees.

That's a big if, however, given the stiff headwind of the general economy pushing against any expansion of benefits. Hiring more employees isn't in the immediate future for most such companies, let alone reinstating health insurance as a fringe benefit for companies that have been dropping plans at a sometimes nation-leading rate.

While the distance to qualifying for the tax break offered through the new Patient Protection and Affordable Care Act, aka federal health care reform, is a long hike, there is a serious and immediate incentive to offer health insurance, Ron Pollack, executive director of the Washington, D.C., health care consumer advocacy group Families USA, said Thursday.

A survey report released by the group, which actively supported federal health care reform, shows that 37,800 small companies in Utah qualify, and 12,600 of those with 10 or fewer employees qualify for the maximum 35 percent tax credit this tax year.

In 2008, Utah employers with fewer than 10 workers had to pay, on average, nearly $350 more for each employee's health insurance than firms with 50 or more workers, according to Pollack's assessment of the report.

"It's no surprise, therefore, that less than half of these smallest businesses offered coverage to their employees.," Pollack said. "This new tax credit should certainly help to improve that record."

The tax break offer seems like a no-brainer to several small businesses. John Arensmeyer, founder and chief executive officer of the small-business advocacy group Small Business Majority, said the report should at least end the speculation that surrounded how many small businesses will qualify for tax credits.

"We now have real numbers that show the vast majority of small businesses in Utah will qualify for tax credits under the new law. That's huge," he said.

In Utah and nationwide, the soaring cost of care is dictating whether a business expands, limiting new hires and even determining whether some people can start a new business, Arensmeyer said. "The vast majority of small-business owners here and across the country believe they have not only the financial but the moral imperative to offer medical insurance."

Steve Hatch and Katie Masterson, owners of Hatch Family Chocolates in Salt Lake's Avenues, feel that imperative every day. They support the tax break, but they don't see it as a financially viable option yet for their staff of eight to 10 workers.