New and existing small employers who do not yet benefit from the Small Business Health Care Tax Credit should look into whether the credit can help them provide insurance to their employees.
For tax years beginning in 2014 and after, the maximum credit is 50 percent of premiums paid for small business employers, and 35 percent of premiums paid for tax-exempt small employers, such as charities.
Beginning in 2014, a small employer may qualify for the credit if:
- It has fewer than 25 employees who work full-time, or a combination of full-time and part-time. For example, two half-time employees equal one full-time employee for purposes of the credit.
- It pays premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program Marketplace or qualifies for an exception to this requirement.
- The average annual wages of full-time equivalent employees are less than $51,000. The annual average wages will be adjusted annually for inflation.
- It pays a uniform percentage for all employees that is equal to at least 50 percent of the premium cost of the insurance coverage.