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"AOI understands that access to and affordability of healthcare is crucial to Oregonians. AOI actively supports legislation that looks at public private partnerships that addresses this key issue of Oregonians, even if it means opposing politically popular mandates.”
--Dennis Rea, President, H.T. Rea Farming Corp.
IRS Issued Guidance Designed to Help Offset the Cost Offering Health Care Benefits
Article by: Betsy Earls - May 27, 2010
The credit is available now and is one of the first provisions of the Patient Protection and Affordable Care to take effect. Eligible small businesses can claim the credit as part of the general business credit beginning with the 2010 income tax return that they will file in 2011. To qualify for the tax credit, businesses must have fewer than 25 full-time employees and pay their staffs an average salary of less than $50,000 per year.
For tax years 2010 to 2013, the maximum available credit will be 35 percent of the health care premiums paid by small businesses and 25 percent of the premiums paid by eligible employers that are tax-exempt. The IRS plans to publish further information on how tax-exempt organizations can qualify and claim the credit.
The value of the tax credit is based on a sliding scale, with the maximum 35 percent credit available only to employers that have 10 or fewer full-time employees and that pay their staffs an average salary of $25,000 or less per year. Because the eligibility rules are based in part on the number of full-time equivalent employees (FTEs), businesses that have part-time employees might qualify for the tax credit even if they employ more than 25 workers.
According to the guidance, businesses can use one of three methods to determine their number of FTEs: by counting individuals, by counting the weeks worked or by counting the hours worked. Companies may select whichever method is easiest and works best for their organization, the guidance states. The guidance provides examples of how employers can use the counting methods to determine their number of full-time employees.
Vision and dental benefits can qualify as part of a business's health care costs and can be factored into calculations for the tax credit as long as a company covers at least 50 percent of its employees' health insurance premiums.
