In 2010, The Affordable Care Act (ACA) created a tax credit for small employers that offer health coverage for their employees. Although this credit will continue in the coming years, certain changes are coming for 2014. Let’s take a look at some of these changes that will affect the health care tax credit for small employers this year. To download a printable list with additional details, click here.
An employer must:
- Employ less than 25 full-time equivalent employees (FTEs)
- Pay wages less than $50,800 per FTE
- Maintain a “qualifying arrangement”
Before 2014, a qualifying arrangement meant that an employer had to pay a premium of no less than 50% of the cost for each employee enrolled in their insurance coverage, also known as “uniform percentage requirement”. Beginning 2014, the uniform percentage requirement is subject to a cost-of-living adjustment.
Only employers with 10 or less FTEs and annual wages averaging $25,400 or less for tax year 2014 can receive the maximum tax credit. If you’re eligible but exceed certain thresholds then you will receive a reduced credit.
Credit Period Limit
Starting in 2014, employers can only receive the health care tax credit for 2 consecutive years. If an employer has received credits prior to 2014, those years will not count against them.
If an employer’s health coverage plan year does not line up with a calendar year, that employer will be viewed as offering SHOP Marketplace coverage. This credit is calculated at 50% for the entire 2014 tax year (35% for nonprofits). The two consecutive-year credit period limit still applies.
FF-SHOP Online Enrollment Delay
The FF-SHOP (Federally-facilitated Small Business Health Options Program) will not be available until November 2014. Employers that choose to enroll their employees in SHOP coverage for 2014 will have to do so through an insurance broker providing a certified SHOP plan. However, this direct enrollment process applies only to states with FF-SHOPs. If your states operates their own SHOPs you will still be able to offer online enrollment to your employees and receive the tax credit.
So much is changing this year. ERM Insurance Brokers in Irvine, California is here to help!
Call (949) 222-0444 to learn more.