Health Insurance Premium Tax Credit for Small Groups

To help you estimate your potential tax credit amount, input the data into the calculator to determine your estimated potential health insurance savings under the new health reform law.

This tool is provided for your convenience and education concerning the small employer's tax credit. This tool is not intended to provide tax or legal advice, and you should not rely on the information provided without first consulting a tax professional regarding the final amount, and any questions you have relating to your unique circumstances.

The tool provides an approximation of the tax credit based on the questions answered, the data provided, and the information currently available to the public from the IRS regarding the tax credit. A more detailed analysis by a tax professional may result in a different amount or might result in no credit.

Your annual tax credit is: 2010-2013 : 2014+ : Number of Full Time Equivalent Employees: Total annual wages: Total employer premiums: Are you a tax exempt organization(Y or N)? Yes No

Under the Affordable Care Act, the Internal Revenue Services issued guidance to encourage small businesses to offer health care coverage for the first time or enable them to maintain the coverage they currently have. IRS Notice 2010-44  (PDF) provides guidelines to help small group employers determine whether they qualify for the credit and estimate the amount of the credit.

Eligibility

In order to qualify for the credit, generally the employer:

1. Must not employ more than 25 full-time equivalent (FTE) employees for the taxable year,
2. Must cover at least 50 percent of the cost of health care coverage for certain workers based on the single rate.
3. The average annual compensation of those employees must not exceed $50,000 per employee per year,
4. Must maintain a qualifying arrangement.

Tax Credit Amount

In 2010, the maximum tax credit is 35% of employer-paid premiums; for tax-exempt organizations the maximum is 25% of premiums-paid.

Examples

The IRS provides scenarios  (PDF) illustrating how the credit applies to employers in different circumstances.

Filing the Claim

Small businesses can claim the credit when they file their 2010 income tax return in 2011. Additional information will be posted to the IRS website when available.