Editor's note: As we know more about how the new health care reform law will affect rural communities, we'll blog about it here.
Small Business Tax Credit to Purchase Health Insurance
Have you heard that the new health care law includes a tax credit for small business to help pay for health insurance coverage for their workers?
Small businesses are the heart of rural communities, and it's no secret that helping to develop entrepreneurs in small towns is a huge part of what the Center for Rural Affairs values.
One of the questions we've been hearing a lot from small business owners is about health care - specifically how the recent passage of health care reform will affect their business.
To make health care more affordable, the new law gives some small businesses with fewer than 25 full time workers a credit of up to 35% of the health insurance premium costs. From the IRS website:
- 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 have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
- A qualifying employer must pay average annual wages below $50,000.
- Both taxable (for profit) and tax-exempt (non-profit) firms qualify.
Amount of Credit
- 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.
The IRS has a short fact sheet to determine whether your business is eligible, and to my surprise it is actually simple! They also have several scenarios to show how the credit works and a page to answer your questions.
You can also watch this video with Health and Human Services Secretary
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