Healthcare Tax Credit Underused

Millions of small businesses failed to claim tax credits they could have received under the federal healthcare reform law, according to a report from the advocacy group Families USA.

The report says more than three million businesses were eligible for the new healthcare credit in the 2011 tax year. The White House, however, has estimated that only 360,000 businesses received the credit.

Under the tax credit, businesses that have fewer than 25 full-time workers and average wages of less than $50,000 are eligible to receive a tax credit of up to 35% of the cost of the health insurance that they provide for their workers. To qualify for the tax credit, small businesses must cover at least 50% of each employee’s health insurance premiums. In 2014, the size of the credit increases to cover up to 50% of the cost of health insurance provided to workers.