Health Care Reform - Who is eligible for the New Tax Credit
Okay, let’s get ready to go to work…..The Patient Protection and Affordable Care Act was signed into law by President Obama on March 23, 2010. This bill and the Health Care and Education Reconciliation Act of 2010, which was signed into law on March 30, 2010, form the new Health Care Reform Law.
Americans can get information about health reform from a wide variety of sources, including the news media, brokers and medical professionals. Even more have gotten information from friends and family and the rumors and stories are everywhere; ranging from our premiums should be going down to why we just received this large increase. With the Healthcare reform document over 2000 pages long, it is very difficult to comprehend what all of this means and how this new law will benefit employers and individuals.
Well, one small piece of this puzzle is the Small Business tax credit for certain small employers that provide health care coverage to their employees. This will be effective with tax years beginning in 2010 remaining in place for upcoming years as well. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. A qualifying employer must 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 must pay average annual wages below $50,000.
Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt employers, the IRS will provide further information on how to claim the credit.
Employers (other than tax-exempt employers) generally cannot claim the credit unless they have taxable income for the year. Also, claiming the credit will affect an employer’s deduction for health insurance premiums. The amount of premiums that can be deducted is reduced by the amount of the credit.
There will be a lot more information to come and as this is just a small piece of the healthcare reform puzzle. We can only hope that everyone from consumers, brokers, our Government and providers are really ready to go to work.
