LCHC ~ Publications & Resources - Consumer Resources

Health insurance premium tax Credit

Starting in 2010, up to 4 million small businesses that offer healthcare coverage to their employees may be eligible for a tax credit. Fill in the amounts below to find out what your tax credit will be.

To qualify, a small business must:

Have fewer than 25 full-time equivalent employees,
Pay average annual wages below $50,000
Contribute at least 50% of each employee's premium

Note that owners are excluded, and should not be counted in number of employees, wages, or premium contribution amount.

Number of full-time equivalent employees:

Add up total number of hours worked by all employees during the year (with a maximum of 2080 hours per employee), then divide total by 2080, and round to next lowest whole number.

Total annual wages paid for all employees:

Add up all the amounts in Box 1 (wages) of every employee's W-2 form.

Total annual employer premium contribution:

Add up the premium contribution the business pays for each employee. This must be at least 50% of the total premium cost for every worker.

Are you a tax-exempt/nonprofit employer?

Yes

Your estimated annual tax credit: 2010-2013

2014+

Note: This is a preliminary estimate, and is contingent upon accurate inputs for FTEs, average wages, and employer premium contribution as defined by the provisions of the healthcare legislation. See http://www.irs.gov/newsroom/article/0,,id=220839,00.html for more information.