This is a complex issue. This credit is up to 35% of the premiums paid for taxable years beginning in 2010 through 2013. It increases to 50% for 2 years after 2013 if the employer participates in an insurance exchange.
A small business for this purpose has fewer than 25 full-time equivalent employees (FTEs) for the taxable year, has average annual wages of its employees for the year of less than $50,000 per FTE, and must maintain a qualifying arrangement.
A qualifying arrangement is one where the business pays premiums at a uniform percentage of not less than 50% of the cost for its employees in 2010. There are several other rules that I can’t lay out for you in this short blog.