Push is on to publicize health insurance tax credit for businesses

It's money for the taking – but will there be any takers?

Not if nobody knows about it.

While most provisions of the federal health care overhaul will take years to roll out, tax credits for small businesses providing health insurance to their workers take effect this year. But insurance agents and health care advocates say many business owners remain unaware of the benefit.

With public opinion polls offering a mixed bag of support for the new health law, backers have been trying to spread the word – part of a strategy to counteract continued criticism from some of the country's largest business groups.

"The more people know about the health care reform law and its benefits, the more they support the package," said Anthony Wright, executive director of Health Access California.

"The tax credits are a very concrete and tangible benefit that small businesses and their workers will be getting," he said.

Billions of dollars are at stake for small companies struggling to afford health insurance for their employees. California has 456,500 small businesses that could conceivably qualify.

Nonetheless, Tim O'Leary, a Sacramento insurance agent, hasn't received many inquiries about the tax credit. He said many small-business owners remain confused about the law.

"There hasn't been a huge outpouring of interest, because a lot of people don't even know about the tax credit," he said. "It's something I have to educate them about. They are a little confused about what's going on."

The recession has also caused many businesses to focus on more pressing issues, he said. "The tax break is nice, but if you're not in the position to offer benefits, it really doesn't matter. It's not as important as trying to keep their doors open."

Educating the country's corps of small businesses – estimated at about 4 million nationally – could help expand health insurance coverage to those currently uninsured.

Companies with no more than 25 workers and whose average annual salaries are less than $50,000 are eligible for a tax credit of up to 35 percent of the employer's contribution for health premiums.

Nearly eight in 10 small businesses are expected to qualify for the tax credits, according to Families USA, a Washington-based health care advocacy group.

The Obama administration hopes that the tax break will spur more companies that don't currently offer health benefits to do so, helping extend health coverage to most of the country's 45 million uninsured, including 7 million in California.

The tax credits were meant as a stopgap measure until 2014, when government-run health insurance exchanges will be in place to help the uninsured and small companies buy health coverage.

"Many small businesses – like the local diner, the hardware store down the street, or the neighborhood repair shop – face special challenges in providing health coverage for their small number of employees," said Ron Pollack, executive director of Families USA.

Kevin Goss, for one, has been reluctant to provide coverage to his 15 employees, most working part time, because of the "overwhelming cost of it all."

Goss, who runs a pharmacy in the town of Greenville east of Chico, just learned of the tax breaks during a chat last week with the Small Business Majority, a Sausalito-based advocacy group that championed the federal health bill.

"It hasn't been a sexy issue, and it hasn't been well publicized. So, it's not generally being talked about," said Richard Yaffee, owner of Capital Tax Service, whose clients include small-business owners and people who are self- employed.

Yaffee himself is a small-business owner, employing eight workers and providing health coverage to four of them. Because "health care is really expensive, particularly for small businesses, I have to constantly re-evaluate which plan I will offer," he said.

Yaffee plans to send out letters to his clients informing them about the tax credit – once he understands it himself.

Small businesses have "an inherent suspicion and skepticism … on anything that requires them to provide something that they consider as extra," such as health insurance, Yaffee said.

Many larger companies – defined as those with at least 50 employees – have been openly hostile to the Obama administration's plan to overhaul the country's health care system.

Under the new law, businesses with at least 50 employees will have to pay penalties – as much as $3,000 per employee, in some cases – if they do not offer health benefits to their workers.

Yet nearly all of the country's largest firms already offer health benefits, according to the Kaiser Health Foundation. Taking advantage of their size, they can obtain better insurance rates than their smaller counterparts, a fact not lost on small-business owners such as Goss, the Greenville pharmacy owner.