4 Things to Know About the Small Business Health Care Tax Credit

Small Business

4 Things to Know About the Small Business Health Care Tax Credit

Published on June 08, 2018

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For some small business owners, qualifying for the small business health insurance tax credit is a huge deal—perhaps even the difference between being able to offer group health insurance and not.
If you’re wondering whether or not you have a chance of qualifying for the small business health care tax credit, then look at these four things to know about qualifying for this tax incentive designed to help small business who wish to offer health benefits to employees.

4 things you need in order to qualify for the small business health care tax credit

  • You must pay average wages less than $53,000*
  • You must employ fewer than 25 employees
  • You must pay at least 50% of each employees’ premium
  • You must purchase your small group plan through the Small Business Health Insurance Health options Program (SHOP) Marketplace, or through a licensed agent who can enroll you in a SHOP plan*

*According to the IRS this amount adjusts for inflation every year. $53,000 was the wage limit in 2017.
*As of 2018 SHOP plans can be written directly through the carrier with the help of certified brokers. eHealth has agents that are certified with SHOP and can enroll groups in plans that qualify for the small business health care tax credit, meaning you don’t have to leave eHealth in order to qualify for the tax credit.
If you checked off all four of the requirements, then you’re already on your way to getting the small business health care tax credit. Keep reading to learn more about how to get small business health insurance, and how you and your employees can both benefit from everything that comes with a small group health insurance plan.

More to know about qualifying for the small business health care tax credit

Besides qualification requirements, there are a few more details you may want to know about how this tax credit could affect your small business:

  • Credits are given on a sliding scale, the smaller the business, the more you will get
  • Maximum credits, according to the IRS, are as 50 percent for small business employers
  • You can only get the small business health care tax credit 2 consecutive taxable years
  • You can carry the tax credit over to past or future tax years
  • You can file amended return for previous year in which you qualified for the tax credit, but didn’t file for it

There are, of course, more details to know about the small business tax credit, which you can check out on the IRS page about this tax incentive.

How to apply for the small business health care tax credit

In order to get the small business health care tax credit, you will need to fill out Form-8941. The IRS supplies a convenient list of documentation and paperwork you should have handy when filling out this tax form:

  • Documentation that you bought a qualified SHOP plan
  • Tally of all your employees
  • The amount you contributed to premiums
  • Employee wages
  • Cost of coverage per employee

Now start shopping for a small business health insurance plan

If you’re a small business owner, the tax credit is money you’re simply putting in your pocket—which understandably, may make it possible for your small business to offer health insurance to your worthy employees.
You can start on eHealth’s guide to the SHOP marketplace, which will provide you with all the information you need to start shopping for plans that will allow you to qualify for the small business health care tax credit.

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