New tax credits could help many small businesses cut health insurance costs.

Numerous business owners in Wiscasset and surrounding towns said they had not heard of the new federal program. Of those who can afford to provide coverage to their employees, most said they would welcome a break on health insurance costs.

Through the national Affordable Care Act, tax credits can save small businesses up to 35 percent of the cost for health insurance premiums, according to a May report issued by the national nonprofit Small Business Majority (www.smallbusinessmajority.org) and consumer group Families USA. According to the IRS, the credit will increase to 50 percent in 2014. Some small business owners and managers in this region said they had not heard of the program.

How the program works

According to Erin Musgrave of the Small Business Majority, the tax credit program works on a sliding scale. Smaller businesses that cover the minimum cost (50 percent) of employee health insurance for fewer employees get the most credit, while businesses with larger numbers of employees may get a smaller credit.

In order to qualify for the program, the average wage of employees must be $50,000 or less, there must be 25 employees or fewer, and companies must pay at least 50 percent of health insurance premiums for employees.

Nonprofit organizations may also be eligible for the tax credit program.

Fossel Building Restoration, Alna

Les Fossel, state representative and owner of Fossel Building Restoration in Alna, pays full insurance coverage for three of his four employees and their families.

Fossel has a health savings account for his employees, to which during healthy business times he can make tax-free contributions. This is good, he said, but it requires money.

Fossel said the economy has taken its toll on his business; he has not paid himself in more than four years and his employee count has dropped from more than ten down to four.

His total cost of employee health insurance premiums is $2,931 per month; that's $977 per employee every month of the year. This adds $11,000 each year to his company overhead for healthcare.

"This is one of the highest costs to doing business in Maine," he said. "It's verging on the unethical." The cost of healthcare in Maine is among the top in the nation, whereas Maine is 45th lowest in average salaries, Fossel said.

He said he does not believe his business would qualify for the tax credit program. Sole proprietorships do qualify, but neither the business owners nor their families can be counted in the health insurance cost credit.

"We'll never be able to solve all of a problem, but we can reduce it in size," Fossel said. "The question we need to ask ourselves is, 'Are we going in the right direction?'"

Grover Auto, Wiscasset

Danny Grover, owner of Grover Auto in Wiscasset said health insurance costs are too high to offer coverage to his employees. His business employs four people; two of his employees get their health insurance coverage from their spouses' plans.

Grover said he could get a health insurance package for his workers, but needs at least three people to sign up to benefit from it, otherwise health insurance premiums cost the business $1,000 per month for each employee.

About the new tax credit program, he said, "It would be worth looking into. I know a lot of people can't afford it."

Coastal Veterinary Care, Wiscasset

Nancy Dalton said she would investigate the tax credit program further. Before now, she had not heard of it.

Coastal Veterinary Care employs 18 people. Dalton, the company's practice manager, said 11 employees have opted for the company health insurance plan, offered through Harvard Pilgrim, while some employees have elected to participate in their spouses' health insurance policies. She said Harvard Pilgrim is a good company, but the plans have high deductibles.

The veterinary care office pays approximately $6,000 per month on health insurance premiums, which Dalton said is relatively inexpensive. However, costs for individual health insurance are too high, she said. Her husband operates Dalton Insulation and she said he cannot afford to provide health insurance for three of his four employees.

"It's been a battle just getting back to where we were in 2008," Dalton said. "If anything, it's made us all more frugal."

Dalton said she believes the veterinary care company she works for would qualify for the new tax credit program.

To see if your company qualifies, visit the IRS website.