Health Care Tax Credit

Health Care Tax Credit

A tax credit available to some small businesses that provide health insurance for their employees. The health care tax credit is a direct, dollar-for-dollar reduction in a business' tax liability up to a certain percentage of the premium it pays for employee health insurance. The credit phases out for average employee incomes between $25,000 and $50,000 and for business with between 10 and 25 full-time employees. This credit became available in 2010.
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CMS now proposes maintaining the Affordable Care Act Small Business Health Care Tax Credit, but allowing employers to enroll directly with insurance companies offering SHOP plans or through a broker registered with SHOP.
Some employers that purchase SHOP coverage are also able to access the Small Business Health Care Tax Credit. This option will still be available to small employers who purchase coverage under the new enrollment approach.
Additionally, small employers who meet certain eligibility criteria and who offer health coverage through the Small Business Health Options Program (SHOP) Marketplace may qualify for a Health Care Tax Credit. For more information on the Small Business Health Care Tax Credit, visit the Internal Revenue Service (IRS) website at www.irs.gov.
Republicans say their health care tax credit would be as easy to move from plan to plan as a backpack.
Of particular interest is the explanation of the Small Business Health Care Tax Credit and ACA's impact on Flexible Spending Arrangements (FSAs) and Health Savings Accounts (HSAs).
Businesses with 25 or fewer employees that offer coverage to their workers through the SHOP marketplace may be eligible for a Small Business Health Care Tax Credit of up to 50% of the employer's cost.
SHOP coverage brings tax benefits to the employer through the Small Business Health Care Tax Credit. The employer must pay at least 50 percent of full-time employees' premium costs, or 35 percent of the premiums paid by tax-exempt employees.
Keep in mind that for businesses to qualify for the small business health care tax credit, they must use the SHOP marketplaces.
But if you want to apply for the Small Business Health Care Tax Credit, you will need to get a notice of your SHOP eligibility before you file your returns for tax year 2014.
* Missing out on a health care tax credit. Under the Affordable Care Act, businesses that provide group health insurance may be eligible for a tax credit.
(2012), "Good Business Sense: The Small Business Health Care Tax Credit in the Affordable Care Act," Report, Families USA and Small Business Majority.

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