Small Businesses

In March 2010 the Patient Protection and Affordable Care Act was signed into law. This sweeping healthcare reform legislation addresses serious problems small business owners face, including skyrocketing healthcare costs, lack of access to affordable coverage and little choice among health plans.

The new law will be implemented over a five-year period (2010-2014) to avoid disruption to the existing system and make the transition as smooth as possible. It will build upon the existing employer-based system, but reform it in a manner that reins in costs for small businesses.

Starting in 2010, up to 4 million small businesses that offer healthcare coverage to their employees are eligible for a tax credit. Fill in the amounts below to find out what your tax credit will be.

To qualify, a small business must:

• Have fewer than 25 full-time equivalent employees
• Pay average annual wages below $50,000 per FTE
• Contribute at least 50% of each employee’s premium
• Purchase health coverage through the SHOP marketplace

Notes:

• Owners, partners, and family members of owners and partners are excluded, and should not be counted in number of employees, wages, or premium contribution amount.
• Tax credits can’t be larger than actual income tax liability.

For detailed information about how the tax credit works and other issues related to the new law and small businesses, see this list of frequently asked questions. We’ll be adding to this document regularly.

Note: This does not constitute tax advice. Contact your tax professional for information regarding your refund or tax liability.
This is a preliminary estimate, and is contingent upon accurate inputs for FTEs, average wages, and employer premium contribution as defined by the provisions of the healthcare legislation. Go to the IRS website for more information.

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Calculator property of Small Business Majority and its subsidiary website California Health Coverage Guide