Senator Charles J. Fuschillo Jr. recently announced a plan to help small businesses afford the cost of providing health care coverage to employees through the creation of a $235 million health insurance tax credit included in the 2001-2002 Senate Budget Resolution.

"The rising cost of health insurance premiums is a tremendous burden on small businesses," said Fuschillo, who is a member of the Senate Commerce, Economic Development and Small Business Committee. "Employers are faced with the difficult decision of whether to shift more of the insurance cost to employees or drop health care coverage entirely. This health care tax credit plan would partially offset premium costs to help ensure continued coverage for employees."

"This initiative by Senator Fuschillo is a clear and welcome recognition of the problem faced by our small businesses and offers them significant relief so they can continue to offer coverage to their employees," said David G. McDonough, president of the Nassau Council of Chambers of Commerce, representing over 6,000 small businesses in Nassau County.

Fuschillo's proposal would allow small businesses, defined as 50 or less employees and net income of $290,000 or less, a tax credit of 10 percent of their cost of health insurance premiums against their income tax liability when the employer provides a benefit of 50 percent or more of the cost of health insurance. This plan would save New York's small businesses approximately $235 million annually.

"A majority of small businesses in New York offer their employees health care coverage and must face annual premium increases of over 10 percent," Fuschillo said. "Employers who do not offer coverage cite the high cost as the primary reason for not providing coverage. Providing this tax credit will serve as an incentive for employers to continue providing coverage for employees and their families."

Additionally, the Health Insurance Tax Credit plan projects a 15 percent increase in qualified small businesses that provide health insurance for their employees. The tax credit would apply to either personal income or corporate income taxes, depending upon the taxable status of the small business. Most New York small businesses currently pay under the personal income tax with greater than 90 percent having projected annual net income of $290,000 or less and more than 1.1 million small businesses having less than 50 employees.

Approximately 40 percent of workers employed by New York's small businesses are currently covered by employment based health insurance. The average premium cost for health insurance is projected at $2,300 per year for individual coverage $5,000 per year for family coverage. In order to qualify for the credit, the small business must pay at lease 50 percent of the premiums cost. According to the 2000 Small Employer Health Benefits survey, over 90 percent of small businesses that provide health coverage currently pay more than half the cost of the premium.