Affordable Care Act
Small Business Tax Credit
Qualifying requirements for the tax credit
 |
 |
 |
 |
Related Topics
|
|
 |
 |
 |
Who is eligible for the tax credit?
Small employers that provide healthcare coverage are eligible (a “qualified employer”) if:
- They have fewer than 25 full-time equivalent employees (FTEs)* for the tax year
- The average annual wages paid are less than $50,000** per FTE
- The employer pays at least 50% of the premium cost under a “qualified arrangement”
* FTEs may be calculated in any of three ways to maximize the tax credit. See “How is the number of employees determined for eligibility?”
** Wage limits will be indexed to the Consumer Price Index for Urban Consumers (CPI-U) for tax years beginning in 2014.
A “qualified arrangement” means: The employer pays 50% or more of the cost of the employee-only premium for coverage through a state-licensed company for traditional health insurance. This contribution requirement also applies to add-on coverage including vision, dental and other limited-scope coverage.
Is a tax-exempt organization a qualified employer?
Yes. The same definition of qualified employer applies, but the amount of the tax credit is lower and special rules apply.
Other documents in the Small Business Tax Credit section:
- Qualifying requirements for the tax credit
- Calculating the tax credit
- Calculating number of employees, average annual wages
- How to claim the tax credit
