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On Anniversary of Affordable Care Act, Kerry-Pallone Legislation Would Help Small Businesses Provide Health Care to Employees

March 23, 2012
Press Release

WASHINGTON, D.C. – On the anniversary of President Obama signing the historic Affordable Care Act, Senator John Kerry (D-Mass.), a senior member of the Senate Finance Committee, today introduced legislation that would help more small businesses provide health care to their employees by expanding the Small Business Health Care Tax Credit.  The bill would increase the average annual wage requirement and size of the businesses that qualify for the credit.  Congressman Frank Pallone (D-N.J), Senior Democrat on the House Energy and Commerce Committee, introduced the companion legislation in the House of Representatives.

This year, 360,000 small employers will take advantage of the Small Business Health Care Tax Credit to offer health coverage to two million workers.  The Small Business Health Care Tax Credit Improvement Act of 2012 would allow more small businesses to take advantage of the tax credit and in turn provide an incentive for them to join a health insurance exchange and offer health care to their employees.

 “The Affordable Care Act was an enormous step towards putting an end to sky-rocketing health care costs and helping every American buy health insurance that's there when they need it. Now, two years later, it’s time to build on one of reform's early successes— the Small Business Health Care Tax Credit,” said Sen. Kerry. “My bill would allow more small business owners to provide health coverage to their employees and that's a competitive advantage for these companies as they grow, create jobs, and recruit workers."

 “It is critical that Congress gives small businesses the tools they need to more easily provide workers with health coverage,” said Rep. Pallone. “These improvements to the Small Business Health Care Tax Credit will encourage more small businesses to offer health coverage and join the new health insurance exchanges, by opening the door to more businesses to become eligible for valuable tax credits.  The bill also streamlines the system for employers by lifting some of the unnecessary requirements that previously made it difficult for businesses to qualify.”

“Improving this provision will let more small businesses take advantage of an important tool to help rein in healthcare costs,” said Rhett Buttle, national outreach and government affairs director for Small Business Majority. “What’s good for small business is good for the economy. Expanding the tax credit would save more small businesses money, which will do even more to stimulate our economic recovery.”

The Affordable Care Act created a Small Business Health Care Tax Credit to help small employers provide health care for their employees.  The Small Business Health Care Tax Credit Improvement Act of 2012 includes the changes to the small business health care tax credit included in the Administration’s budget for fiscal year 2013 and one additional change. 

 The Small Business Health Care Tax Credit Improvement Act of 2012 would:

·        Allow small businesses with up to 50 full-time employees to qualify for the credit.  Currently, the tax credit is available to employers with no more than 25 full-time employees. 

·         Increase the average annual wage amount to $57,000. Currently, the tax credit is available to employers whose employees have average annual wages of $50,000 or less. 

·        Streamline the rules.  Currently, employer contributions are limited by a requirement that caps the employer contribution based on the average premium in the State and by a requirement that the employer must make uniform contributions of at least 50 percent of each employees’ premium to qualify for the credit.  The Small Business Health Care Tax Credit Improvement  Act of 2012 repeals these requirements.

·        Be effective for taxable years beginning after December 31, 2011.




Ray Zaccaro