Healthcare Reform FAQ #2

By October 3, 2013Blog

Question – Will I qualify for the small business tax credit under Health Reform?

Answer – This one is fairly simple: You may qualify for employer health care tax credits if you have fewer than 25 full-time equivalent employees making an average of about $50,000 a year or less.

To qualify for the Small Business Health Care Tax Credit, you must pay at least 50% of your full-time employees‘ premium costs. You don’t need to offer coverage to your part-time employees or to their dependents.  Starting in 2014, the tax credit is worth up to 50% of your contribution toward employees’ premium costs (up to 35% for tax-exempt employers).

The credit is available only if you obtain coverage through the SHOP Marketplace, expected to open 11/1/14. 

Higher benefits for smaller businesses

The tax credit is highest for companies with fewer than 10 employees who are paid an average of $25,000 or less. The smaller the business, the bigger the credit.

Example of how the tax credit works

Example for an employer who qualifies for the maximum credit worth 50% of their premium contribution in 2014:

Number of employees: 10

Wages: $250,000 total or $25,000 per employee

Employer contribution to employee premiums: $70,000

Tax credit amount: $35,000 (50% of employer’s contribution)

Find out if you qualify for the small business health care tax credit

You don’t have to wait until SHOP open enrollment to find out if you qualify for the small business health care tax credit.

You can find out now by visiting You can also consult with your tax advisor or accountant to learn if you qualify, and if so, how much your credit will be.

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