Changes Health Care Tax Credit for Small Business

By | March 3, 2015

Small employers should be aware of changes in the tax credit health care for small businesses, a provision of the Affordable Care Act ACA. This arrangement provides a tax credit to eligible small employers that provide health care to their employees. The intended goal of this legislation is to help more Americans get health insurance through their employers.


Changes Health Care Tax Credit for Small Business

Beginning in 2014, there are changes to the tax credit can affect your small business or tax exempt organization:

• The percentage of credit increased from 35 percent to 50 percent of premiums paid by the employer; for tax-exempt employers, the percentage increased from 25 percent to 35 percent.

• Small employers can claim the credit only for two consecutive taxable years beginning with the tax year 2014 and beyond.

• For 2014, the credit is gradually eliminating when the average salary equals $ 25.400 and credit disappears completely when the average wage exceeds $ 50.800. The average income that establishes the gradual elimination of credit is adjusted annually for inflation.


Qualified Plan of the Health Program Options for Small Business Market (SHOP QHP)

• Generally, small employers are required to purchase a Qualified Plan of the Health Program Options for Small Business Market (SHOP QHP) to be eligible for the EIC Health. Assisting the transition to this requirement is available for some small employers.

Small employers may still be eligible to claim the credit for years prior to 2014. Employers who were eligible to claim the credit in previous years, but did not, can consider whether they are still eligible to amend tax returns for years Previous to claim the credit.


Information about IRS Form 8941

The following information will help you complete Form 8941 , Credit Insurance Premiums for Small Employer.

• Documentation or letter of eligibility SHOP QHP, unless the applicable transitional assistance 
• Number of full-time employees and part-time and number of hours worked 
• Average annual salaries for employees 
• Premiums paid by employer employee if is relevant 
• Schedule K-1 Relevant and other credit information of the individual 
• Cost of coverage for each employee 
• Tax Liability payroll – only to tax-exempt organizations 
• Credit information transferred to the individual – for Schedule K-1 for other employers small