Health coverage legislation enacted last month includes a Small Business Health Care Tax Credit to help small businesses and small tax-exempt organizations afford the cost of covering their workers.
A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate. A qualifying employer must also have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible), and the employer must pay average annual wages below $50,000.
Both taxable (for profit) and tax-exempt firms qualify.
The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers). The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
An enhanced version of the credit will be effective beginning in 2014. The new law, the Patient Protection and Affordable Care Act, was passed by Congress and was signed by President Obama on March 23, 2010.
