Senators Coons, Merkley introduce bill to expand ACA small business tax credit

WASHINGTON – U.S. Senators Chris Coons (D-Del.) and Jeff Merkley (D-Ore.) introduced legislation on Thursday to help small business owners who want to provide health insurance to their workers. The Small Business Tax Credit Accessibility Act would expand and simplify the Affordable Care Act’s small business tax credit, making it available to more employers and for a longer period of time. U.S. Reps. Suzan DelBene (D-WA-01) and Ron Kind (D-WI-03) also introduced the legislation in the House of Representatives on Thursday.

“The Affordable Care Act is already doing a lot of good for a lot of Americans, but where we can make it work better, we should,” Senator Coons said. “I’ve spoken with small business owners in Delaware who want to offer their employees health insurance, but are struggling to afford it.  The Affordable Care Act created a small business tax credit to help these businesses, but unfortunately too many are either ineligible or discouraged by its complex requirements. Congress should listen to these concerns, acknowledge that these small business owners are voluntarily trying to do right by their workers, and act to strengthen the Affordable Care Act. This bill would make a big difference for our small businesses and the millions of people employed by them.”

“The Affordable Care Act has expanded health care coverage to millions of Americans, but we can do even more by improving small business tax credits,” Senator Merkley said. “Tax credits that are less complex and that are available to more small businesses will be a win-win for the business community and American workers. Small businesses are standing by, ready to help their employees get affordable, quality health insurance — we just need to put the tools in their hands.”

Senators Al Franken (D-Minn.), Heidi Heitkamp (D-N.D.), Mazie Hirono (D-Hawaii), Tim Kaine (D-Va.), Angus King (I-Maine), Joe Manchin (D-W.V.), and Jeanne Shaheen (D-N.H.), are original cosponsors of the measure.

The Small Business Tax Credit Accessibility Act would:

  • Raise the maximum size of businesses that are eligible to receive the credit from 25 employees to 50 employees
  • Extend the credit to businesses with higher average wages. Currently, only businesses with an average wage below $50,000 can qualify for the credit. This bill would raise the maximum average wage to 330% of the federal poverty line for a family of four ($80,025 in 2015).
  • Increase the threshold for a firm to receive the maximum credit from 10 to 20 full-time employees
  • Modify the phase-out of the credit to ensure that any business that meets the full-time employee and average wage thresholds will qualify for a tax credit of some magnitude
  • Increase the number of years for which a small business may receive the credit to three consecutive years
  • Eliminate the requirement that employers claiming the credit contribute the same percentage of the cost for each employee’s health insurance
  • Simplify calculations by eliminating the cap that limits eligible employer contributions to average premiums in the state

“Brokers and agents have tried to make the existing tax credit under the Affordable Care Act work for small business to provide healthcare to their employees,” wrote National Health Underwriters Association Executive Vice President and CEO Janet Trautwein, “but according to a Government Accountability Office study, fewer small employers claimed the credit for tax year 2010 than were thought to be eligible based on rough estimates of eligible employers made by government agencies and small business groups. The GAO study went on to suggest there was low use of the tax credit because many small businesses didn’t actually qualify due to credit size and sheer administrative complexity.”

“These changes to the tax credit will go a long way towards helping more small business owners afford to purchase small group plans through the new health insurance marketplaces,” wrote Small Business Majority Founder and CEO John Arensmeyer. “We know from our research that many small business owners want to offer health insurance to their employees, but can’t afford to do so. The tax credit included in the healthcare law has helped many small businesses better afford health insurance, but it can do more. Expanding the credit and simplifying the process to claim it will help countless small businesses better afford health insurance for their employees.”

The bill has been endorsed by the Association for Enterprise Opportunity, Association of Women’s Business Centers, Families USA, Main Street Alliance, National Association of Health Underwriters, National Association of Insurance and Financial Advisors, National Grocers Association, National Retail Federation, Small Business Majority, Third Way, U.S. Black Chambers Inc., and Women Impacting Public Policy.

The full text of the bill is available here: