Federal tax credits are available now for small businesses and nonprofits to help cover the cost of health insurance for employees. In 2015, the tax credit will increase, paying up to 50 percent of premium costs for small businesses and 35 percent of premium costs for nonprofits. This credit is available to employers for two years.

To qualify for a tax credit, small employers must:

  • Provide health insurance to employees and cover at least 50 percent of the cost of single coverage.
  • Employ fewer than 25 full-time workers (employers with fewer than 50 part-time workers may be eligible).
  • Pay average annual wages below $50,000, excluding the wages of owners and their families.

Use our calculator below to find out if you might qualify for a tax credit, and if so, what amount you may expect. Keep in mind that results from the calculator are an estimate. Please consult your tax advisor for further assistance.

Four easy steps to find your credit:

Note: If you are a for-profit entity, your tax credits can't be larger than your actual income tax liability.

Note: DO NOT INCLUDE WAGES OF OWNERS AND THEIR FAMILIES IN THE CALCULATOR

For more information about how we made the calculation, click here.

You can also view information on the IRS website

About the Calculation

Notes

  1. In order to qualify for the tax credit:
    • You must have fewer than 25 full-time equivalent (FTE) employees.
    • The average annual wage of all employees must be less than $50,000.
    • You must contribute at least 50% of each employee's insurance premium. You must also contribute at the same rate to any add-on coverage such as dental or vision coverage. (Contributions are based on the employee-only premium; for employees with employee-plus-one or family coverage, you must contribute at least 50% of the employee only premium amount. You are not required to contribute at least 50% of the employee-plus-one or family premium amount.)
  2. The calculation is based on the number of FTE employees you have. This is calculated from the total hours worked by your employees, not the number of people you employ. Even if you have more than 25 employees, you may still qualify for a tax credit if you have employees that only work part-time.
  3. You can calculate the number of FTE employees you have by totalling the number of hours worked by your employees, or you can estimate it based on the number of days or weeks worked. Do not include any overtime when totalling the number of hours worked. Divide the total hours by 2,080 (2,080 is the number of hours worked in 40-hour work week for a single year), and round down to the nearest whole number.
  4. Owners and their employed family members are excluded.
    An owner is excluded if they are:
    • a sole proprietor
    • a partner in a partnership
    • a shareholder owning more than 2% of an S corporation or an owner of more than 5% of other types of businesses
    Employed family members are excluded if they are:
    • children or grandchildren
    • siblings or step-siblings
    • parents or grandparents
    • step-parents
    • nieces or nephews
    • aunts or uncles
    • sons-in-law or daughters-in-law
    • fathers-in-law or mothers-in-law
    • brothers-in-law or sisters-in-law
    This means their hours and wages do not apply to the number of FTE employees, the hours worked, the amount of average annual wages, or the amount of premium contribution.
Questions? E-mail info@connectforhealthco.com.