More Employers to Get on Health-Insurance Kick?

By Features FOXBusiness

Recent tax credits coupled with the planned health-care overhaul has some U.S. small business owners who currently don’t offer health insurance swaying toward giving employees the option now or in the near future, according to a new survey. The study also found that the same legislation has small businesses who currently offer coverage finding themselves more likely to continue offering it.

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One third, or 33%, of employers who currently do not offer insurance said they are more likely to start providing it soon because of the tax credits, and the same percentage reported they are more likely to provide insurance due to insurance exchanges that will go into effect in 2014, according to a study conducted by Small Business Majority, a nonprofit organization based in Sausalito, Calif. The survey was conducted in November by Bellwether Research and Lake Research Partners; it polled 619 randomly-selected small business owners across the country by phone. Of these employers, 306 have between three and nine employees, and 313 have between 10 and 49 employees.

John Arensmeyer, CEO of Small Business Majority, said while the recent tax bill can benefit small businesses immediately, insurance exchanges won’t come into play for several years. The insurance exchanges tentatively scheduled to launch in 2014 are online markets where small businesses and individuals can purchase insurance together. Arensmeyer said polling has consistently shown small business owners want the opportunity to offer insurance to their employees, and anything to alleviate the cost and burden of supplying it will push them to implement such changes.

“As long as we have a system where the primary place to get insurance is the workplace, and we do, they will want to participate and offer these benefits to employees,” Arensmeyer said.

The survey found that an average of 31% of respondents, including 40% of businesses with three to nine employees, who currently offer insurance, said the tax credits will make them more likely to continue providing insurance. The same percentage of those who currently provide insurance also reported that the exchange will make them more likely to continue providing the benefits to employees.

The new Health Care Tax Credit allows businesses with less than 25 employees and average annual wages of less than $50,000 to get a tax credit of up to 35% of their health insurance costs beginning in tax year 2010. Many small business owners simply do not understand the new law or know that these provisions exist, Arensmeyer said, which means they don’t know how to take advantage of the aspects of the bill that they can benefit from.

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“There has been more heat than light on the Affordable Health Care Act,” Arensmeyer said. “The result is that it is confusing for business owners. There is negative ideological talk, instead of rational discussions happening.”

But Amanda Austin, director of federal public policy for the National Federation of Independent Business, argued the real lack of understanding falls to how much small business owners know about the tax credit and insurance exchange. It is unclear as to whether or not the survey respondents would even qualify for the tax credits, she said.

“I would caution people against making sweeping assumptions, and to us this [survey] is a sweeping assumption,” Austin said. “If [insurance] is not a more affordable product, they ain’t gonna buy it. Bottom line.”

Austin is less likely to celebrate the tax-cut extension law when it comes to small business owners, she said simply because it is temporary and hard to qualify for.

“A small group of business owners will qualify,” she said. “We are basically asking them to stay small and pay their employers less to qualify. It is premature to see how the overall law will affect the entire country, but if this is the best this law has to offer them, everyone should be gravely concerned.”

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