The Patient Protection and Affordable Care Act (PPACA) includes a potential tax credit for small businesses who are already offering or plan to provide health care insurance to employees,
Here is a summary of the criteria for eligibility:
- You employ the equivalent of fewer than 25 full-time workers. So if you have 10 people full-time and 20 part-timers who each work 25 hours per week, you still qualify.
- Your employees earn an average annual wages below $50,000.
- You cover at least 50 percent of the cost of health insurance for your employees.
The credit is effective January 1, 2010 so you may already be eligible. The tax credit is worth up to 35 percent of the premiums your business pays for health insurance based on a sliding scale that includes wages and number of employees in the calculation. The full credit is available for firms that employ fewer than 10 equivalent workers who earn average annual wages below $25,000. The maximum value of the credit increases in 2014 to 50 percent.
Average employer contributions, across all size businesses, towards health insurance are 75 percent for single coverage and 80 percent for family, so the 50 percent requirement would not be unusual to find. The wage threshold for the full credit is pretty low but the framers of the legislation estimate that 4 million small employers will be able to take advantage of this tax credit.
It should not be too hard to pull out payroll records and benefit bills and call your accountant to find out if you will be one of the businesses earning a tax break for providing health insurance.