WASHINGTON — As many as 58,000 small businesses in South Carolina may qualify for a new federal tax credit for providing health insurance to their employees, the Treasury Department said Friday.
The Internal Revenue Service is sending postcards to the companies, urging them to take advantage of the credit created in the landmark health care bill that President Barack Obama signed into law in March.
If all eligible businesses in the state use the credit starting with their 2010 tax filings, it will save them as much as $574 million in total by 2019, according to the nonpartisan Congressional Budget Office — an average discount of almost $10,000 per company.
Companies with fewer than 25 workers who receive average annual wages below $50,000, excluding owners' salaries, are eligible for a partial tax credit if they provide health insurance.
Those businesses can recoup up to 35 percent of their insurance premium costs.
Smaller companies can recover up to half their premium costs through the tax credit. To qualify for the full credit, they must employ no more than 10 people with an average salary of under $25,000, excluding owners' compensation.
Dental and vision coverage qualifies in addition to core medical benefits. Under new guidance issued Friday, religious organizations and nonprofit groups qualify for the tax credit along with private companies.
Businesses must use the new one-page IRS Form 8941 to claim the health insurance credit.
The form can be downloaded or printed at http://www.irs.gov/pub/irs-pdf/f8941.pdf, with instructions available at http://www.irs.gov/pub/irs-pdf/i8941.pdf.
The credits will be phased out over time, with small businesses limited to claiming them for six years.
Nationwide, small companies pay an average of 18 percent more than large companies for the same health insurance policy for their employees, the Treasury Department said.
The new tax credit would save 4 million small businesses across the country a total of $40 billion over the next decade, according to the IRS.
Congress passed the health insurance legislation almost exclusively along party lines, with only three Republican senators voting for it and no support in the House.
Sens. Lindsey Graham and Jim DeMint voted against the measure, saying the costs of fulfilling its federal mandates requiring companies to provide health insurance would badly damage South Carolina's economy.
Obama rejected Gov.-elect Nikki Haley's request Thursday to repeal the health care law, but he indicated a new willingness to consider allowing states to opt out of its mandates if they provide some similar core protections for uninsured residents.