By: Trey Whitt, CPA & Partner at Dent, Baker & Company, LLP
As described in a previous post, most of the tax provisions of the recent federal healthcare legislation are not effective for several years. One notable exception is the small business health insurance credit. Here is how it works:
For businesses that employ 10 or fewer full-time employees with average annual wages of less than $25,000, a federal credit is available this year of 35% of employer-paid health insurance premiums. To be eligible, businesses must pay at least 50% of single coverage on behalf of its employees. A smaller credit is available for businesses with more than 10 employees and higher annual wages, but the credit is fully phased out for businesses with 25 employees and annual wages of $50,000.
The legislation provides guidance on making the full-time employee determination; also, certain wages are excluded from the average annual wage computation. Be sure to contact us for assistance on the credit availability for your business.