By WALECIA KONRAD
Published: September 17, 2010

BETSY BURTON feels as if she dodged a bullet. At 64 and a co-owner of the King’s English Bookshop in Salt Lake City, she has been in business for 33 years and employs 25. Her shop provides health insurance to seven full-time employees.

But premium increases in recent years were so astronomical that health care costs had been eating up 30 percent of the store’s revenue, about $78,000 a year. “That’s just not sustainable for any business,” Ms. Burton said.

Last year, she seriously considered dropping health care coverage altogether or shutting the bookstore’s doors. But relief arrived in the form of the new health care law. Beginning this year, the law provides generous tax credits to small businesses struggling to maintain health coverage.

After sorting through the somewhat complicated requirements, Ms. Burton discovered her store was eligible for the full credit, which will give the business a rebate of $21,000 this tax year. So for now, the King’s English is still in business, and Ms. Burton and her employees have kept their insurance.

“These people really need their insurance, and I’m right there with them,” Ms. Burton said. “I have a son with special needs, and I don’t know what would happen to him or us without this insurance.”

Just over one-third of Americans work for small businesses with fewer than 100 employees. If you’re one of those workers, you know that very few small companies offer comprehensive health insurance — or for that matter, any health insurance at all. Even when they do, premiums can be prohibitively expensive, because small businesses can’t negotiate the discounts given to large group plans.

To help close that gap, the government this year is offering a tax credit to companies with fewer than 25 full-time workers and average wages of less than $50,000 a year. To qualify, employers must pay at least 50 percent of their employees’ health care premiums.

Small businesses with 10 full-time employees or fewer earning an average of $25,000 or less are eligible for the largest credit, 35 percent of their health insurance premium costs. Companies with larger numbers of employees earning more receive smaller credits on a sliding scale.

Not every small shop will qualify for the credits, but a recent study by two advocacy groups, Small Business Majority and Families USA, estimated that 84 percent of small businesses were eligible. (This includes firms that currently offer some type of coverage.)

One health care foundation, the Commonwealth Fund, said in a recent report on small business and the new health law that up to 16.6 million workers were employed by eligible companies.

“The tax credit and other provisions in the health care law are designed to repair the weaknesses in the health care system and bring small employers on a level playing field with large companies,” said Sara R. Collins, vice president for affordable health insurance at the Commonwealth Fund.

If you own a small business, it might pay to familiarize yourself with the new provisions in the health care law. They may convince you that you can afford to offer health insurance or keep your existing policy in place.

If you’re an employee at a small company, you could learn the details yourself and make sure your employer is ready to take advantage of the coming changes. Entrepreneurs are busy and not always plugged into these kinds of administrative changes. Your input may mean the difference between getting insurance or going without.

CREDIT QUALIFICATIONS A simple worksheet on the I.R.S. Web site (bit.ly/9uXsqM) helps to show whether your firm has the proper number of employees and average salaries to qualify for the new tax credits. The site also has clear explanations of how the credits work.

There is no application process; the business owner simply files one additional form with the company tax return. Start pulling together the figures now, though. The tax credit begins in the 2010 tax year, so the payoff will come as soon as next January, said John Arensmeyer, chief executive of Small Business Majority.

The tax credit is set to expire in 2016, on the assumption that by then most small businesses will have made the transition to the insurance exchanges, where policies will be more affordable and premium costs will be the same for all participants.

DROPPED COVERAGE Effective Sept. 23, insurance companies will no longer be permitted to deny coverage to people simply because they have gotten sick.

In the past, some insurers tried to find errors in a customer’s application, then used them as an excuse to deny payment for a large claim. Employees of small businesses were particularly vulnerable, said Mr. Arensmeyer.

The new law makes this practice illegal.

PREVENTIVE CARE Starting in September, all new health care plans must pay for preventive care, including physicals and other wellness programs. This extra care may mean extra costs for small-business owners.

Fortunately, the government has set aside $200 million in grant money over five years to help small employers provide programs like smoking cessation, nutrition, physical fitness and stress management.

“Wellness programs are easy for large companies like Safeway or I.B.M., but a small firm doesn’t have the bandwidth to absorb the administrative costs,” said Mr. Arensmeyer. Companies with fewer than 100 employees may apply for grants, which are administered by the federal Department of Health and Human Services.

AFFORDABLE OPTIONS Small businesses will have even greater tax benefits once the new state health insurance exchanges are up and running in 2014. The maximum tax credit will increase to 50 percent at that time — but companies must buy insurance through the exchanges to be eligible.

What’s more, insurance companies will not be able to charge more in premiums based on sex, age or health status. In the past, small companies with older or ill workers were hit with huge premium increases in their company plans, said Ms. Collins of the Commonwealth Fund.

That’s what happened to Ms. Burton. Three employees, including Ms. Burton, have entered their 60s in the last few years. They are charged higher premiums than other employees because of their age. As a result, health insurance costs for the company, already on the rise, have skyrocketed.

One of the older employees ended up relocating.

“We were really skating on thin ice,” said Ms. Burton. “If she hadn’t left, I’m not sure we would have made it through last year.”

The new law should help prevent large premium increases. Plus, small companies that have had trouble finding or deciding on an affordable plan should find the job easier with the streamlined exchange options.

“Currently small businesses pay 18 percent more for the same coverage that large businesses have,” Mr. Arensmeyer said. The new law, he believes, will go a long way toward closing that gap.

(Source: A version of this article appeared in print on September 18, 2010, on page B6 of the New York edition.)