Reminder: Health Care Tax Credit available for small businesses

March 2012

By Dr. Mark Lutschaunig, director of the AVMA GRD

The Small Business Health Care Tax Credit is available to help small businesses and tax-exempt organizations offer health insurance coverage. These tax credits are available for employers with no more than 25 employees and average annual wages of less than $50,000. In the first phase, which will be implemented from the years 2010-2013, the government will provide a tax credit of up to 35 percent of the employer's contribution to the employee's health insurance premium if the employer contributes at least 50 percent of the total premium cost or 50 percent of a benchmark premium. The credit will be awarded on a sliding scale. The full credit will be given to employers with less than 10 or fewer employees and average wages of $25,000. The credit phases out as the firm size and average salary increases. Tax-exempt small businesses meeting these requirements are eligible for a tax credit of up to 25 percent of the employer's contribution to the premium. In the second phase (2014 and beyond), eligible businesses that buy insurance through one of the state exchanges will receive a tax credit of up to 50 percent of the employer's contribution, if the employer contributes at least 50 percent of the employee's premium total cost. As with phase one, the full credit will be given to employers with less than 10 or fewer employees and average wages of $25,000. The credit phases out as the firm size and average salary increases. Tax-exempt small businesses meeting these requirements are eligible for a tax credit of up to 35 percent of the employer's contribution to the premium. These credits will be available for two years. For more information, go to Affordable Care Act Tax Provisions on the IRS.gov website.

For more information please contact Dr. Mark Lutschaunig, director, AVMA Governmental Relations Division.

The AVMA Advocate - News Bites - March 2012