The Small Business Health Care Credit

What is the Credit?

The Small Business Health Care Credit is designed to help you provide health insurance coverage to your employees. For tax years 2010 through 2013, the credit can be up to 35% of your share of your employees’ health insurance premiums; or, if you’re an eligible tax-exempt employer, up to 25% of your share of premiums.

You are an eligible small employer for the tax year if you meet these three requirements.

  1. You paid premiums for employee health insurance coverage under a qualifying arrangement.
  2. You had fewer than 25 full-time equivalent employees (FTEs) for the tax year. You may be able to meet this requirement even if you had 25 or more employees.
  3. You paid average annual wages for the tax year of less than $50,000 per FTE.

For tax years 2014 and later, there are changes to the credit:

  • The credit can be up to 50% of your share of your employees’ health insurance premiums, or, if you’re an eligible tax-exempt employer, up to 35 percent of your share of premiums.
  • You must purchase insurance for your employees through the Small Business Health Options (SHOP) Marketplace.
  • The credit is only available to you for two consecutive years.

For more information contact a Templeton Tax Professional.