For Small Employers

IF YOU DO NOT Offer Insurance to your Employees...

Starting in 2014, if you are a Small Business, with 50 or fewer FTE employees (100 in Hawaii), and DO NOT OFFER insurance, you can use the Small Business Health Options Program (SHOP) Marketplace to offer coverage to your employees. With this, you may control the coverage you offer and how much you pay toward premium costs.

  • October 1st - Open enrollment for the current year.
  • January 1st - Health coverage through SHOP starts, after successful open enrollment.

IF YOU DO Offer Insurance to your Employees...

If you currently offer insurance, then you may qualify for the Small Business Health Care Reform Tax Credit. Please continue reading to the next section...

Small Business Health Care Reform Tax Credit

Beginning in 2014, the small business health care tax credit is available only if you get coverage through SHOP.

New laws provide tax credits to eligible employers who offer health insurance to their employees. Employers that offer health insurance to their employees may qualify the IRS Credit for Small Employer Health Insurance Premiums. To be eligible, you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. You must also have fewer than 25 FTEs. Those employees must have average wages of less than $50,000 a year.

For more information about Small Employer Health Care Tax Credits and IRS Tools Click [HERE].

To determine if you qualify for the Small Business Health Care Reform Tax Credit,

  • Click [HERE] for the IRS Small Employer Tax Credit Worksheet

Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments are more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That's both a credit and a deduction for employee premium payments.

Starting in 2014, the tax credit is worth up to 50% of your contribution toward employee premium costs (up to 35% for tax-exempt employers). This will make the cost of providing health coverage lower

  • If you are ALREADY insured, then Click [HERE] for more information.

There is GOOD NEWS for small tax-exempt employers, too. The credit is REFUNDABLE, even if you have no taxable income. You may be eligible to receive this credit as a refund so long as it does not exceed your Income Tax Withholding and Medicare Tax Liability. Finally, if you can benefit from the credit this year but forgot to claim it on your tax return, there's still time to file an amended tax return.

To claim this credit, you must use Form 8941 to calculate the credit.

  • Click [HERE] for Form 8941 - "Instructions".
  • Click [HERE] for Form 8941 - "Credit for Small Employer Health Insurance Premiums".

If you are a tax-exempt organization, include the amount on line 44F of the Form 990-T ( see link below ). You must file the Form 990-T in order to claim the credit, even if you don't ordinarily do so.

  • Click [HERE] for Form 990-T - "Exempt Organization Business Income Tax Return".

For more information about what small business employers need to know Click [HERE].

You are here: Home How Does ACA Affect My Organization ? Details for Small Employers