Health Tax Credits Coming Soon?

Postcards from the Internal Revenue Service (IRS) proclaim one of the first provisions of the recently enacted health care reform law to go into effect will be tax credits for small businesses.

The Wall Street Journal reports that the IRS has sent postcards to more than four million small businesses urging them to check if they qualify for the tax break. It’s being offered in two phases, with the first worth up to 35% of qualifying businesses’ premium health care costs for tax years 2010 through 2013. The rate increases to 50% in 2014. The maximum length of potential coverage for qualifying employers is six taxable years; four years under the first phase and two years under the second.

To be eligible for the tax credit, businesses must cover at least 50% of the cost of health care coverage for some of their workers, employ fewer than the equivalent of 25 full time workers and pay average annual wages below $50,000.

Which small businesses are left to fend for themselves? It appears that companies with between 25 and 50 employees and companies with less than 25 employees, but with payrolls that average $50,000 or more.