Harvard Pilgrim Healthcare, with NH headquarters in Manchester, recently sent a press release outlining tax benefits of he Affordable Care Act (ACA) Under the Affordable Care Act (ACA), small businesses that purchase qualified health plans for their employees through the Small Business Health Options Program (SHOP) are eligible for a tax credit, beginning in 2014.
Available to eligible small businesses for two consecutive tax years, the tax credit is:
- up to 35% of premiums paid by tax-exempt small businesses
- up to 50% of premiums paid by non-tax-exempt small businesses
Eligibility Requirements:
- Small businesses must cover at least 50% of the cost of employee-only health care coverage for each of their employees.
- Small businesses must have fewer than 25 full-time equivalent employees (FTEs). FTEs include both full-time and part-time employees.*
- The employees' average wages must be less than $50,000 (will be adjusted for inflation annually beginning in 2014).
- The tax credit is highest for companies with fewer than 10 FTEs who are paid an average of $25,000 or less. As the number of employees increases, the amount of the credit slowly decreases until it phases out when the group size reaches 25 or more FTEs.
Remember, the small business tax credit is available only to those small employers who offer a qualified health plan through the SHOP.
The IRS has published information about this tax credit, including the necessary forms to obtain the credit, at www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers
*The ACA defines a full-time employee as one who works 30 hours per week. Part-time employees’ hours are added to be counted as a full-time employee (e.g., three part-time employees, each one working 10 hours per week, would count as one full-time employee, not as three employees).
Current Issue - May 2024