New Health Insurance Tax Credit

The Patient Protection and Affordable Care Act could earn tax exempt organizations a new tax credit for providing health insurance to employees.  The tax credit is available for 2010. 

Are you are eligible?

Employers who contribute at least 50% of the single premium, have fewer than 25 employees (more if you have part‐time employees), and less than $50,000 in average wages, may be eligible. To determine if you qualify for the Tax Credit, follow these three simple steps:

Eligibility Calculation

Step 1. Calculate the total number of employees  ______ Full‐time Employees (Number of employees who work at least 40 hours per week)

+ ______ Full‐time equivalent of part‐time employees (Divide the total + annual hours of part-time employees by 2080)

=______Full‐time equivalent employees

If the total number of employees is fewer than 25, GO TO STEP 2

Step 2. Calculate the average annual wage  ______ Take the total annual wages paid to employees (including part‐time employees)

÷______ Total number of full‐time equivalent employees from Step 1

= ______ Average annual wages If the result is less than $50,000,

 Step 3. Determine employer contribution.

If the employer pays at least 50% of the single (employee only) health insurance premium, then you may be able to claim the Small Business Health Care Tax Credit.

How much could you receive?

Eligible small employers could qualify for a credit worth up to 35% of premiums paid in 2010 (for businesses) or 25% of premiums paid (for tax‐exempt groups).

Read more about this on the IRS website.