Small Employer Health Insurance Credit

Under the Patient Protection and Affordable Care Act as amended by the Health Care and Reconciliation Act of 2010, eligible small employers may claim a tax credit for nonelective health insurance contributions that it pays for coverage of its participating employees, providing that the small employer pays at least 50% of the health insurance cost. A maximum credit of 35% of the health insurance expenses is available beginning in tax year 2010 through tax year 2013. Tax-exempt organizations that meet the small employer criteria are eligible for a maximum credit of 25%.

An eligible small employer is defined as one with 25 or fewer full-time equivalent employees; the average salary of these employees is $50,000 or less and the employer has a qualified health care arrangement in effect. Small employers that have 10 or fewer full-time equivalent employees with average salaries of $25,000 or less could receive the maximum credit. The credit would be reduced through a series of calculations for small employers that have 11 to 25 full-time equivalent employees and/or average salaries from $25,001 to $50,000.

Please contact our office so that we can help you determine if your business qualifies for this health insurance credit.