The Healthcare reform legislation allows certain small employers and tax-exempt organizations that pay at least half of the cost of health insurance for their employees to claim a tax credit starting this year (2010). The rules for determining eligibility for, and the computation of, the credit are quite complicated.
To qualify for at least a partial credit, an employer must have fewer than the equivalent of 25 full-time employees and pay them average annual wages under $50,000. Because eligibility depends on the number of “full-time equivalent” (FTEs) employees rather than the number of employees, employers that employ a combination of full-time and part-time help may qualify for a credit. Owners of the business and their family members are not counted in calculating the FTEs and the annual wages for qualifying for the credit. For the years 2010-2013, the credit can be as high as 35% of premiums.
As mentioned, the rules are complicated and have many “ifs”, so it is difficult to give a general answer on the amount of credit available for a specific organization. If you are paying health insurance for your employees and think this may affect you, please give Schutte & Hilgendorf a call or send an e-mail to loish@prescottaccountants.com and we will customize the calculations for your specific situation to see how you may benefit.
For tax years beginning after December 31, 2010 and beyond, an employer must disclose on each employee’s W-2 Form the value of the employee’s health insurance coverage sponsored by the employer.
Beginning in 2014 an employer who employs an average of at least 50 full-time employees during the preceding calendar year is required to offer and contribute to their workers’ health insurance or pay a penalty.
