PPACA Reform Helps Employers Provide Small Business Medical Insurance

The Patient Protection and Affordable Care Act (PPACA) includes a potential source of savings for employers and revenue for agents.
IR-2010-38 is a new tax credit for tax-year 2010 that helps certain small businesses pay for the health insurance benefits they provide to their employees. There has never been a better time to add small business medical insurance to your companies list of employee perks!

Who is eligible

This new small business tax credit is available to employers with fewer than 25 full-time equivalent employees who pay at least 50 percent of the employee’s medical insurance premium. The tax credit is limited to employers who have an average payroll of $50,000 per employee, excluding the owner and family members. Smaller employers—those with 10 or fewer full-time equivalent employees—who pay annual average wages of $25,000 or less may receive the maximum credit of 35 percent. In 2014, the maximum credit for small businesses will increase to 50 percent of premiums paid.

State and federal credit available

If an employer receives a state-level health care tax credit or subsidy, they will also receive the full federal credit based on their entire contribution as long as the federal credit does not exceed the employer’s net contribution.

Additional Information
  Watch a video about the small business health care tax credit.
  Read an FAQ from the IRS.
  Health Reform Small Business Guidance - key facts on the small business health care tax credit.
  Three Simple Steps - determine if you qualify for the credit.
  Small Business Health Care Tax Credit Scenarios - examples of employers receiving the credit .