The Patient Protection and Affordable Care Act

Other Provisions
 

SMALL BUSINESS TAX CREDITS
 

Small Business Tax Credits

Small businesses are eligible for a general business tax credit against the cost of their contributions to their employees’ healthcare coverage. To be eligible, businesses must contribute at least 50% in cost-sharing and have less than 25 employees and less than $50,000 in average full-time equivalent employee wages.

Until 2014:

• Businesses will receive a credit amount of 35% of the lesser of:
  • Contributions made on behalf of their employees’ healthcare coverage; or

• The credit amount that the employer is eligible for will be reduced by the sum of:
  • The number of full-time employees minus 10 then divided by 15 then multiplied by the credit amount; and
  • The amount of average per-full-time employee wages minus $25,000 then divided by $25,000

In 2014 and beyond:

• Businesses will receive a credit amount of 50% of the lesser of:
  • Contributions made on behalf of their employees’ coverage in a Qualified Health Plan; or
  • The contribution the employer would have made if each of their employees had enrolled in a Qualified Health Plan with a premium equal to the average for the small group market in their rating area

• The credit amount that the employer is eligible for will be reduced by the sum of:
  • The number of full-time employees minus 10 then divided by 15 then multiplied by the credit amount; and
  • The amount of average per-full-time employee wages minus the previous year’s wage threshold increased by the cost-of-living adjustment then divided by previous year’s wage threshold increased by the cost-of-living adjustment

Small businesses will be able to claim the credit for 2 years.

(Please note: This document was produced by the Self-Insurance Institute of America to provide an overview of the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act. It does not cover every aspect of the legislation, and certain provisions of the law may change or be modified by additional rules and regulations. This document does not constitute legal or tax advice.)