Small businesses want to expand Iowa's middle class by attracting and retaining the best workers. Providing good health care benefits is one way to do that.
Unfortunately, health care is the fastest-growing expense for small business owners. On average, small businesses pay 18 percent more than large businesses for the same coverage, and health insurance premiums have gone up three times faster than wages in the last 10 years.
To ease this financial burden on our small businesses, the Senate passed Senate File 449 with bipartisan support. This bill builds on a federal tax credit through the Affordable Care Act for businesses with fewer than 25 full-time employees. The federal tax credit equals 35 percent of the cost of providing health care to employees through 2013 and 50 percent starting in 2014.
State Senator Steve Sodders
Senate File 449 would benefit more than 73,000 Iowa businesses by providing a state tax credit worth 25 percent of the federal credit. For example, a company that spends $50,000 a year providing health care benefits would receive a 35 percent federal credit of $17,500. The proposed Iowa state credit would add an extra $4,375. The net cost of providing $50,000 in employee health insurance would be reduced by $21,875.
This tax credit is another step in our efforts to reduce health care costs and make affordable health care available to all Iowans.