Navigating the Healthcare Credit Mess
By Carol Tice Edited by Dan Bova
Opinions expressed by BIZ Experiences contributors are their own.
You may know one of the few items in the big healthcare reform bill that takes effect this year is a small-business credit for offering healthcare to employees. If you've delved into it, you know it's based on a really complicated formula.
Fortunately, there's some new help out there for business owners trying to understand if they qualify, and if so, how much they could receive.Healthcare reform, officially known as the Affordable Health Care Act, provides a small-business tax credit of up to 35 percent of the cost of premiums for qualifying business. BUT -- what you get depends on factors including how many full-time employees you have and how much those workers make. Your actual credit might be less than 35 percent.
Confused? The IRS has stepped into the breach with new guidance to help you determine if you qualify. Their recently issued notice on the tax credit contains examples to help you tell if you qualify and how much you might get from the credit.
Some basics for qualifying:
- You need fewer than 25 employees or the equivalent in part-timers.
- Average annual wages need to be under $50,000 per worker
- Your business pays at least 50 percent of the premiums for the workers
The IRS notice will walk you through the process of calculating your full-time workers, making sure your health plan qualifies for the credit, and goes over how to calculate and claim your credit.
If you think you have a chance of qualifying for the credit, it's worth investigating -- savings can be substantial. If you're considering instituting a plan, be sure to run these numbers and see how they'd affect your actual costs. Another aspect to note -- the credit rises to 50 percent in 2014.
