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Resource Center > Article
Health Insurance Tax Credit Left Unused by Many Small Business Owners
31 May 12 Posted by: Kathleen C Lanza
in In The News
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This month’s report by the Government Accountability Office (GAO) found that hundreds of thousands if not millions of small business owners did not avail themselves of the health insurance tax credit designed to help them afford health insurance for their employees in 2011. Why? According to advocacy organizations like the Small Business Majority, Families USA and the Small Business and Entrepreneurship Council, among many others, the reasons are far more complex than simple lack of awareness.

Various reports from these and other groups over the course of the past year or so have indicated that― aside from some pretty strict eligibility standards that exclude many small business owners―other factors such as complexity and lack of financial incentive are playing a bigger role than Congress might like to acknowledge.

Asked by the IRS why so few of them claimed the credit last year, many business owners said that it just wasn't worth their time and effort, according to the report. The primary reason for this seems to have been two-fold. First, the filing process was so complex, lengthy (at least seven worksheets) and required such involved math that many said it would take too long to make it worth their while. And second, spending all the necessary time to make a claim made no sense when the payoff was either very small or even non-existent. More worrisome was the fact that some businesses found they would actually lose money by taking the credit.

All of which leaves many of us to wonder: How much of the small business healthcare tax credit is about politics as usual and how much of it is really about providing relief to American business owners and their employees when and where they need it most?

Click on Health Care Tax Credit: Factors Contributing to Low Use and Complexity now to view the GAO's full report findings.

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