You know the value of providing health insurance to your employees but it can be a real challenge for small businesses. On average, small businesses pay about 18% more than large firms for the same health insurance policy because small businesses lack the purchasing power that larger employers have. The Affordable Care Act provides tax credits, and soon, the ability to shop for insurance in Exchanges that may help close the gap.
Top Things to Know for Small Businesses
- For tax years 2010 through 2013, the maximum credit is 35 percent for small business employers and 25 percent for small tax-exempt employers such as charities.
- If you have up to 25 employees, pay average annual wages below $50,000 per employee, and provide health insurance, you may qualify for a small business tax credit of up to 35% (up to 25% for non-profits) to offset the cost of your insurance.
- Employer-based plans that provide health insurance to retirees ages 55-64 can now get financial help through the Early Retiree Reinsurance Program. This program is designed to lower the cost of premiums for all employees and reduce employer health costs.
- Starting in 2014, the maximum small business tax credit increases to 50% for qualifying businesses, (35% for non-profits).
- In 2014, small businesses with generally fewer than 100 employees can shop in an Affordable Insurance Exchange, which are designed to make buying health coverage easier and more affordable.
- Exchanges will offer a plans that meet certain benefits and cost standards and can help you look for and compare private health plans, get answers to questions about your health coverage options, determine tax credit or health program eligibility, and will allow you to enroll in a health plan that meets your needs.
- Employers with fewer than 50 employees are exempt from new employer responsibility policies.
Here are two great resources for more information:
Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.