"Everyday America's small business owners and entrepreneurs are finding more ways to get affordable coverage through the Affordable Care Act." said Karen Mills, Administrator of the Small Business Administration in a recent speech. "After years of dropping coverage, the number of small businesses offering health care coverage to their workers is actually going up."
This new credit helps small businesses and small tax-exempt organizations afford the cost of covering their employee's health care and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.
To be eligible for the credit a qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate, must have less than the equivalent of 25 full-time workers and pay average annual wages below $50,000.
The credit is worth up to 35 percent of a small business' premium costs in 2010 (25% for tax-exempt employers). On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers). The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
The IRS provides a simple worksheet for organizations to quickly determine if an organization meets the requirements for the credit. The worksheet can be found by going to http://www.irs.gov/pub/irs-utl/3_simple_steps.pdf
The NGLCC is teaming with the Small Business Majority to share a series of webinars between now and Tax Day that explain the tax credits in more detail. To take part in an upcoming webinar, please click here (link to: http://www.smallbusinessmajority.org/webinar/ )
