The small business health care tax credit, newly available this year, can help some businesses endure competitive pressures and soaring health insurance costs. The tax credit, part of the federal health care reform law passed in 2010, seeks to aid small businesses or tax-exempt organizations in maintaining or initiating health insurance coverage for their employees.
How does it work?
The IRS recently issued guidelines on eligibility and how to claim the tax credit. If you’re a small employer and want to claim the credit, you’ll need to take a look at IRS Form 8941 or the revised IRS Form 990-T — both available at IRS.gov.
Online calculators can help verify eligibility and determine the credit’s value. The credit is worth up to 35 percent of a small business’ premium costs in 2010 or 25 percent for tax-exempt employers, such as nonprofits. On Jan. 1, 2014, the credit increases to 50 percent for small businesses and 35 percent for tax-exempt organizations.
Most small businesses, such as restaurants, are eligible for a new federal tax credit that helps start or maintain health insurance benefits for employees.Those eligible for the credit must pay at least half of the health insurance premiums for their employees. The credit’s value varies based on staff size and salaries. An employer with 10 employees earning an average of $25,000 a year gets more than one at the scale’s high end, which tops out at 25 employees earning a yearly average of $50,000.
Who’s eligible?
About 4 million small businesses are eligible for the tax credit, says John Arensmeyer, CEO of Small Business Majority, a nonprofit that focuses on health insurance. That represents nearly 84 percent of all small businesses in the country.
Most small businesses learned about the credit in April 2010, when IRS postcards encouraged them to check eligibility. Another IRS mailing, early in 2011, should boost awareness beyond the current level of roughly 40 percent, Arensmeyer predicts.
“We need to do more work to get the word out,” Arensmeyer says.
What’s the effect?
While a larger credit would have been nice, the current credit is big enough, Arensmeyer says, that many businesses can consider providing health benefits and others may scrap plans to drop or limit health benefits.
Indeed, the relief couldn’t be timelier. A recent report from The Commonwealth Fund revealed that premiums for employer-sponsored family health insurance jumped an average 41 percent from 2003 to 2009 — three times faster than median incomes — and now typically range from $11,000 to $14,000 a year. Premiums equaled or surpassed 18 percent of median household income in 26 states, up from three states in 2003.
At King’s English Bookshop in Salt Lake City, Utah, owner Betsy Burton has found such cost increases disturbing. The tax credit will ease some of the burden of offering health insurance to her store’s 25 employees — a budget item that she says sometimes has eaten up a “ridiculous” one-third of total payroll costs. That’s beyond the threshold (about 30 percent of revenue) where any bookstore becomes financially unsustainable.
Anne Holman, general manager of King’s English Bookshop, says the tax credit will help the store compete against large bookstore chains with deeper pockets.
“Because our margins are so small,” Holman says, “this really makes a difference.”
To obtain the small business health care tax credit, you or your tax preparer must fill out a special IRS form.Virtually all small businesses feel the effect of continuously escalating health care insurance costs. At Metropolitan Landscaping Management Inc. in Dayton, Md., premiums for the company’s staff of 10 increased 30 percent in a single year, says Marsha Geist, president and co-owner.
Without the new tax credit, Metropolitan Landscaping Management likely would have discontinued health care coverage.
“Somebody has to pay for it,” Geist says, “or it comes out of everyone’s pockets.”
What’s next?
Geist says the tax credit is a positive step, but she thinks the IRS restrictions on income levels should be loosened. In her community, near Baltimore, even a $50,000 annual income isn’t much. Besides taking into account workers in areas with a high cost of living, Geist says, the tax credit should better support companies that employ higher-paid professionals.
Burton, the Utah bookstore owner, says she hopes the IRS targets accountants as well as small businesses in its continuing outreach about the tax credit. Burton says her own accountant learned about the tax credit from her. Also, she says, tax preparers should realize that the credit can be carried forward to future years in certain situations, such as when a business reports an annual loss.
The federal government must do more to trim health care costs and encourage employers to hire or retain older employees, whose insurance customarily costs more than that for younger staff members, Burton says.
Burton acknowledges the tax credit is helpful, “but if costs keep going up, it’s not enough.”
–Dean Lampman
View the original article here
Filed under insurance by on Jan 28th, 2011. Comment. 
You probably know that banks use information in your credit report to determine if they’ll extend credit. But did you know that in most states, insurance companies also consider your credit history? Good or bad, your credit history may affect which companies will sell you homeowners or auto insurance coverage and will often determine the price you’ll pay.
Late credit card payments or not having a credit history at all will often affect your rates. Here are two examples:
Last year, you were unemployed for six months. Before you could find a new job, you fell behind on several credit card payments, but you’ve caught up. Now your auto insurance rates are going up, even though you’ve never filed a claim against your policy. What’s the reason?You’ve always paid your bills on time, but you pay by check or with cash instead of applying for credit—even for major purchases. Why would this be a problem?What’s the score here?
Insurance companies have always used various criteria to determine who to insure and at what rates. For example, auto insurance rates are based on your age, driving record, make and model of your car, and how many insurance claims you’ve filed in the past. In states where it is permitted by law, insurance companies also use credit information as an additional factor to help predict which drivers represent more risk. Insurers believe that the more stable your credit history, the less likely you are to have an accident or file a claim against your auto or homeowners insurance policy. And the more likely you are to pay your insurance premium payments.
If your credit history (along with other factors considered) suggests that you are likely to be a responsible driver, you may be offered a lower premium. But if your credit history is tarnished—or if you have little or no credit history—you may pay higher premiums for the coverage you’re offered. You may even be denied coverage altogether.
How you can improve the score
If your rate changes or you are denied insurance coverage because of your credit history, the federal Fair Credit Reporting Act allows you to order a free copy of your credit report from the bureau used by the auto insurance company. If you feel the information provided to the credit bureau is incorrect, you can dispute it. Every insurance company is required to disclose whether you rate was affected by your credit report, and other consumer reports, such as your motor vehicle report.
If you’ve been turned down for insurance, this may feel like too little, too late. But if your credit history is affecting your ability to get auto or homeowners insurance (or the premiums you’re charged for it), here are a few things you can do:
Clean up your credit immediately. Pay at least the minimum amount due every month, consolidate high interest credit cards on a lower rate card, and don’t spend beyond your means.If you don’t have any credit, get some. Your lack of history is what’s hurting you; to the insurance companies, you’re an unknown quantity. Although you don’t want to run up excessive debt, you do want to show that you can use credit responsibly. Student or car loans, fitness club memberships, and store credit cards are usually easy to get and can help your credit report if paid regularly and used correctly.Once a year, check your credit reports at AnnualCreditReport.com. This site allows you to request a free credit file disclosure once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. The information contained in one report may not be reflected by the others, so make sure all the information is correct and dispute any errors with both the creditor and the credit bureaus involved.For now, the use of credit reports is an industry standard. Make your credit work for you by watching it closely. In most cases, you may be rewarded with lower premiums if you do so.
Looking for different information? Have questions or comments? Please let us know.
Originally posted September 10, 2004.Filed under insurance by on Dec 27th, 2010. Comment.
How long do you have to transfer your license and registration?
I recently moved from Chicago, IL to Columbus, OH. I still have Illinois driver’s insurance and my car is registered in Illinois. My license is still an Ohio one from 3+ yrs ago (i know, i never changed it! bad bad). But i do plan on changing my Ohio License to update the mailing address.
How long do i have to get these done legally? 30, 60, 90 days?
30 days. And you will have to get an inspection done on the vehicle to be able to transfer the title to Ohio. (Basically this is just a VIN # confirmation, no big deal, and police dept. or DMV office can do it)
Filed under auto insurance price quote by on Jul 15th, 2010. Comment.