You can save money—up to 35%—on your portion of an employee’s health insurance premium. Here’s the scoop on a new Small Business Health Care Tax Credit you may not know about:
- Must have 24 or fewer full-time equivalent employees
- Must offer health insurance
- Must pay at least half of an employee’s single (not family) health insurance premium
- Employees’ average annual wage must be less than $50,000
Do you meet all of these criteria? Then you’re eligible to claim a tax credit of up to 35% of your contribution toward health insurance premiums.
This tax credit is designed to encourage smaller businesses to offer health insurance. It’s part of the complex and controversial Patient Protection and Affordable Care Act (PPACA) passed in March of 2010, also known as the Health Reform Act. As of November, 2011, the IRS reported only 5% of taxpayers were claiming this credit.
How come most small employers aren’t taking advantage of this tax credit? Great question! Based on our 2011 Iowa Employer Benefits Study©, it’s because many aren’t aware of it.
- 57% of Iowa employers with 2 to 10 employees were unaware
- 43% of Iowa employers with 11 to 25 employees were unaware
Also, the calculation is complex, with multiple steps. But don’t let that stop you. The best place to start learning more is here. To help small employers, the IRS created different tools for-profit and tax-exempt organizations. Be sure and talk to your tax advisor about this program, too. The sooner you take action, the sooner you can reap the savings.
