Tax credits for small groups

Any price changes will depend on the coverage options groups currently have and which plan and coverage options groups choose in 2014. There are taxes and fees associated with the Patient Protection and Affordable Care Act. Additionally some small groups qualify for a tax credit.

The small business premium tax credit is already in effect. Starting in 2014, the maximum tax credit increases to 50 percent of the employer’s contribution toward insurance premiums. It is available only to small employers that purchase coverage through the SHOP Marketplace.

Non-profit employers meeting the eligibility criteria can receive tax credits for 25 percent of the employer’s share of premium costs through 2013 and 35 percent starting in 2014. To be eligible for the tax credit, a small business must:

• have fewer than 25 FTE workers (as defined in IRS Form 8941);
• an average annual employee wage below $50,000; and
• cover at least 50 percent of the cost of health insurance coverage.

The full credit is available to employers with 10 or fewer employees with average annual wages of less than $25,000. The credit decreases as the firm’s size and average wage increases. It is capped based on the average health insurance premium in the geographic area where the small business is located.

Eligible small employers can claim the current credit through 2013. The enhanced credit can be claimed through the SHOP Marketplace for any two consecutive taxable years beginning in 2014. Information on how to claim the small business tax credit is available from the Internal Revenue Service at www.irs.gov.